Enron from a Legal Standpoint

Enron

The tragic fall of Enron led to a revolution in the way people think about large corporations. Before the surge of white collar crime in the late 1990s and early 2000s, there were no regulations in place that forced corporations to accurately report their finances. This led to a series of immoral and devious deceptions that caused many people to unfairly lose their life savings without any form of recourse, while a select few were given immense wealth throughout the process. Enron failed to act with any sort of compassion for its employees and investors. It has become the symbolic spokesperson of fiscal liberty in this era.

Enron was able to circumvent the law with their liberal accounting firm Arthur Anderson. This firm acted in bad faith, ignoring the generally accepted accounting principles (GAPP) that were established by the Securities Exchange Committee (SEC), in order to help Enron falsify their financial reports. Arthur Anderson’s failure to act in good faith and maintain their fiduciary duty as an accounting firm has caused them to no longer be a viable company. As far as managing their legal factor I could have given both Enron and Arthur Anderson the same advice. They both should not have engaged in unethical business practices. Enron falsified their financial reports and Arthur Anderson enabled them to do so. These companies can’t manage their legal factors because what they both were doing was illegal in the first place.

However, the real tragedy resulting from this scandal are the poor investors and employees of Enron who had their life savings and pension invested in the company that was secretly robbing them. These people who have become the victim of large losses can most likely sue to get compensated for their investment. Enron can certainly be held responsible for gross negligence, fraud, and failure to act within their fiduciary duty to their investors, as well as failure to act in good faith.

Taking a look at the civil charges from a more in depth point of view, Enron should certainly be held liable and responsible monetarily. Enron should first be held responsible to make good with society. By society I am referring to the investors and employees that lost all of their money due to the falsification of the company’s financial statements. The way I see it Enron could also pass some of the liability off to Arthur Anderson because of their involvement in the scandal. They should technically be responsible for some of the damages too. After Enron pays their debt to society, they also should be required to pay fines to the government for breaking various laws dealing with unfair business practices. An example needs to be made of Enron from a monetary standpoint before they are charged with any criminal offenses.

Enron is liable for criminal charges as well for their failure to act within the rules and regulations of the Securities Exchange Committee (for various securities fraud) as well as other laws that were passed in the wake of this event. An example of this type of legislation is the Sarbanes Oxley Act which forces companies to accurately report financial information to the government and to investors. This is one of the acts that Enron’s business practices violated. The individuals directly involved in the scandal from Enron and Arthur Anderson should face jail time. I would suggest a five year sentence. This would teach these individuals a lesson and probably thwart any other individuals from getting involved in the same kind of scandal anytime soon.

There is a gray area that exists as to where Enron employees stand in this matter. While many violated federal securities laws by shredding documents or falsifying financial reports, these were all at the order of their bosses. In international law a defense known as the Nuremburg Defense does not allow soldiers who have acted on the behalf of their government while committing a