{"id":2685,"date":"2011-12-12T07:00:20","date_gmt":"2011-12-12T15:00:20","guid":{"rendered":"http:\/\/www.formtek.com\/blog\/?p=2685"},"modified":"2011-12-12T07:00:20","modified_gmt":"2011-12-12T15:00:20","slug":"compliance-has-much-changed-ten-years-after-enron","status":"publish","type":"post","link":"https:\/\/formtek.com\/blog\/compliance-has-much-changed-ten-years-after-enron\/","title":{"rendered":"Compliance: Has Much Changed Ten Years After Enron?"},"content":{"rendered":"

On December 2, 2001, Enron declared bankruptcy. \u00a0Immediately regulators cracked down, passing the Sarbanes-Oxley Act which requires executives to sign off of accounting statements and to be criminally liable for their accuracy. \u00a0Ten years later, have things improved?<\/p>\n

By some indication, things have only gotten worse. \u00a0A decade later, we still read similar newspaper headlines. \u00a0Last week Mary Schapiro, chairman of the SEC, told congress that the SEC is investigating the accounting procedures of MF Global<\/a> and how it was able to be exposed to risky foreign sovereign debt.<\/div>\n
<\/div>\n
Tom Fowler<\/a> of the Houston Chronicle<\/a> reported that\u00a0Sam Buell<\/a>, one of the first prosecutors on the federal government\u2019s Enron Task Force and now a law professor at Duke University, said that he was \u00a0dumbfounded <\/em>by the extent to which Enron\u2019s lessons have been lost. \u00a0\u201cWe thought Enron was the 9\/11 of the financial markets, that it was a cataclysm that would change the world. \u00a0The financial collapse of 2008 is evidence that it didn\u2019t. \u00a0Enron was the canary in a coal mine warning about the systemic problems that we needed to look at, particularly where it comes to risk management.\u201d<\/div>\n
<\/div>\n
Stephen Arbogast<\/a>, a University of Houston finance professor and author of the book on the Enron collapse, said <\/a>\u201cThat\u2019s the piece of the Enron story that carries over to the financial community. \u00a0The money for the bankers is so big, they\u2019re so acculturated to the idea that they can make so much money in the short term that the long run really doesn\u2019t matter.\u201d<\/div>\n
<\/div>\n
Nancy Rapoport<\/a>, a law professor at the University of Nevada, Las Vegas and author of a book on Enron, said that “until we change the incentives for people meeting their quarterly projections, we are going to continue to create cheats.” \u00a0 Eliot Spitzer agreed, saying <\/a>that “when you begin to mix research and underwriting, bad things will happen\u2026 Human nature being what it is, when your bonus depends on getting the IPO done, you\u2019re going to say what you need to say.”<\/div>\n
<\/div>\n
The question is what can be done and whether any additional regulation would truly have a chance of succeeding.<\/div>\n
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On December 2, 2001, Enron declared bankruptcy. \u00a0Immediately regulators cracked down, passing the Sarbanes-Oxley Act which requires executives to sign off of accounting statements and to be criminally liable for their accuracy. \u00a0Ten years later, have things improved? By some…<\/span><\/p>\n

Read more ›<\/a><\/div>\n

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