Legal Issue-Enron

Topics: Enron, Ethics, Business ethics Pages: 6 (1774 words) Published: October 30, 2012
Legal Issue in Business: The Case of Enron
[Name of the Writer]
[Name of the Institution]

Legal Issue in Business: The Case of Enron

Business ethics is based on normative ethics , standards that ethics are upheld and applied specific to distinguish what is right or wrong, that is to say what should be done or who should not be fact. However, with few exceptions, business ethicists are usually less interested in the foundations of ethics (meta-ethics) or by the principles of justification ethical principles: they show themselves more concerned with practical issues, and any obligation specific practice that may apply to the activity and the relationship to economic (Swartz, 2004).

Discussion and Analysis
Government regulators have been quite willing to act as enforcer for the reformers. In the process, they have criminalized common business practices and created crimes of full disclosure out of whole cloth where there had been none before. This activity made for great theater and lurid headlines that furthered the political ambitions of prosecutors, but it was certainly not at all helpful to the economy. Corporate governance reforms affect every aspect of life in America when they impose unneeded restrictions on management, and the full disclosure system is the most burdensome of all. SEC regulations govern every aspect of securities trading, from the initial offering and the underwriting process to the secondary markets. The "Enron Scandal" is already a landmark in the history of capitalism that may significantly influence its necessary transformation. The current capitalism "has been a mother," which has escaped all the regulations and controls that kept him within an ethical context.

Business Ethics, Applied Ethics
The trend in recent decades has been to integrate these concepts ever within companies. Be prescriptive, legislating (eg, through the sanction of insider trading, bribes, accounting rules, executive compensation, discrimination, respect for privacy, the sanction of barriers to competition etc..). The question that arises is that Law and business ethics are they compatible? However, ethics and law remain to distinguish, since the law seeks to maintain order, where ethics seeks only to indicate a course of conduct (soft law) that economic actors should adopt. O'Fallo (2005) explains this difference by showing that no law can be both judge and party, while ethics refers to the personal views and thus the judgment of consciousness leads to a reparability between the rule moral and appreciation.

Enron was one of the largest companies U.S. by its capitalization market. In addition to its own activities in the natural gas, this Texan company had set up a system of brokerage by which she bought and sold electricity, including the network of current distributors of the State of California, communication. In December 2001, it was bankrupt because of its losses from speculative trading on the electricity market, which had been disguised as profits via accounting manipulation. This failure resulted in its wake of Arthur Andersen, which audit it accounts.

The Reality
Before Enron, Corp Fin had a goal of reviewing each company’s annual report at least once every three years. That goal was not met. Only 53 percent of public companies filing with the SEC had their annual reports reviewed in the three years preceding Enron’s collapse. Interestingly, Corp Fin did review the annual reports filed by Enron in 1991, 1995, 1996, and 1997. The division also conducted full reviews of Enron’s proxy statements in 1993 and 1994, as well as documents submitted for a merger and acquisition of some subsidiaries in 1996 and 1997. Corp Fin conducted full reviews of two securities offerings by Enron in 1992 and 1998 and undertook partial reviews on particular issues of seven other Enron offerings. No serious problems were revealed in any of those examinations (Dharan, 2004).

The Enron Code...

References: Dharan, Bala G.; William R. Bufkins (2004), Enron: Corporate Fiascos and Their Implications, Foundation Press, ISBN 1-58778-578-1
O 'Fallon, M, (2005), A review of the empirical ethical decision-making literature: 1996-2003, Journal of Business Ethics, pp. 375-413.
Swartz, Mary; Sherron Watkins (2004), Power Failure: The Inside Story of the Collapse of Enron, Broadway Business. ISBN 0-7679-1368-X
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Enron Ethical Issue Essay
  • The Three Legal & Ethical Issues in Business in Bangladesh Essay
  • legal issues Essay
  • Essay on Legal & Ethical Issues for It Practitioners
  • enron Essay
  • Legal Issues within Disability Discrimination Essay
  • enron Essay
  • Enron Essay

Become a StudyMode Member

Sign Up - It's Free