Nevertheless such mandatory disclosures presume that people can and will cognitively appraise such disclosures as against to higher noise trading. In the light of realities of emotional regulating, the SEC in general and its compulsory disclosure regime is particular might perform more harm than good and yet stay because of the emotional appeal rationales and considerations. (Parisi; Smith, 2005)
The history of U.S. federal securities regulation from the very beginning following the Great Depression to the most recent Sarbanes-Oxley Act of 2002 in the wake of Enron, Arthur Anderson, iet Aid, Worldcom, Tyco, Merk and Global Crossing is that of neglect of Securities Market interrupted by legislation in response to political and public pressure arising from highly primitive and public episodes of banking, corporate or securities fraud and scandals. Mandatory disclosures might be at best an impotent and at worst a socially harmful regulatory policy if the majority of investors…...
mlaReferences
N.A. (n. d.) "United States Securities and Exchange Commission Strategic Plan 2004-09:
Government Actions" Retrieved 30 March, 2009 from http://www.sec.gov/about/secstratplan0409.pdf
Parisi, Francesco; Smith, Vernon L. (2005) "The law and the economics of irrational behavior" Stanford University Press.
Securities and Exchange Commission, United States Securities and Exchange Commission,
SEC ICTV
The Securities and Exchange Commission (SEC) has a large responsibility for ensuring that the country's vital economic needs are protected. The purpose of this essay is to discuss a real world and practical application of the SEC's involvement in a case where accounting malfeasance was suspected and ultimately proven true in a court of law. This essay will examine the case of International Commercial Television Inc. (ICTV) and its accounting blunder that cost the accounting firm of Dohan & Company its repuatation and penalties.
According to the official SEC complaint, violation of Section 21(d) of the Securities exchange act was committed by ICTV's submission of their accounting statements. "These proceedings arise out of espondents' improper professional conduct during their audit of International Commercial Television, Inc.'s ("ICTV") 2007 financial statements. During fiscal year 2007, ICTV improperly recognized revenue and incorrectly recorded product returns, resulting in a material overstatement of revenue and…...
mlaReferences
The United States Securities and Exchange Commission. Administrative Proceeding 3-997, 20 Jan 2007. Retrieved from http://www.sec.gov/litigation/admin/2011/34-63740.pdf
Secondary Market
hat issues does the secondary market face when it comes to IPOs?
The Economic Times (TET) in India explains that when a company issues securities to the public for the initial time, it is offered in the primary market. However, once the IPO (initial public offering) has been offered, and the stock can be listed in the market, those securities are then traded in the secondary market (TET). The main difference between the two markets is that when an investor puts down money for securities in the primary market, that investor deals directly with the company offering the IPO. But once the securities are in the secondary market, the investor buys them from "other investors willing to sell…" (TET).
hat can go wrong -- how can fraud occur in secondary markets?
In Forbes, contributor J.J. Colao offers an example of what can go wrong or awry with secondary markets. He notes that…...
mlaWorks Cited
Colao, J.J. (2012). 'An Abomination That Should Stop': What's The Problem With
Secondary Markets? Forbes. Retrieved July 25, 2015, from http://www.forbes.com .
The Economic Times. (2010). Definition of 'Secondary Market.' Retrieved July 25, 2015,
The U.S. Supreme Court then granted a writ of certiorari to determine the meaning of the language "in connection with the purchase or sale of any security" (Reed, O. Shedd, P. Morehead, J. & Pagnattaro, M. 2008).
What argument did the security dealer make in seeking to have the civil complaint dismissed?
andford's defense in this matter was particularly interesting as he does not deny his involvement in the "simple theft of cash or securities in an investment account" (Reed, O. Shedd, P. Morehead, J. & Pagnattaro, M. 2008). For andford the issue is not that he sold the securities which he contends "were perfectly lawful," rather that the fraudulent activity of "misappropriation of the proceeds is desultory from the actual sale of the securities. If andford's argument is believable then the sales of securities would have been aligned with the investment strategy designed to secure principal and generate income. andford's…...
mlaZandford's defense in this matter was particularly interesting as he does not deny his involvement in the "simple theft of cash or securities in an investment account" (Reed, O. Shedd, P. Morehead, J. & Pagnattaro, M. 2008). For Zandford the issue is not that he sold the securities which he contends "were perfectly lawful," rather that the fraudulent activity of "misappropriation of the proceeds is desultory from the actual sale of the securities. If Zandford's argument is believable then the sales of securities would have been aligned with the investment strategy designed to secure principal and generate income. Zandford's contention falls squarely on the premise that the securities transactions were legitimate sales and not concomitant with intent to defraud.
What does the Supreme Court Conclude with respect to the language "in connection with the purchase or sale of any security?
The question of "in connection with the purchase or sale of any security" invariably falls to the Court's interpretation of the circumstance surrounding the Zandford transactions. The Court rejects Zandford's argument that the sales and the transfers of funds from Wood's account to Zandford's were separate and disconnected. Zandford's argument falls apart because the sales "throughout the two-year period" (Reed, O. Shedd, P. Morehead, J. & Pagnattaro, M. 2008) reflect a deliberate and concerted effort to "convert the proceeds of the sales of the Woods securities to his
This could have been interpreted as the company having an orientation more towards money-making than to the development of strong ethics.
Leadership, or lack thereof, made a strong contribution to the Tyco failure. The company's leaders set the cultural tone of the firm, but they were also among the primary actors engaged in the fraud. Kozlowski and the other executives were front and center in the fraud, and committed many of the egregious acts themselves. There is little doubt that the Tyco failure had more to do with the caliber of the company's leadership that with any issues surrounding the employees themselves. For the most part, the structure and the leadership were the reasons for the Tyco failure.
Management was less complicit. Although the managers were influenced by the culture passed down by Tyco's leaders, they were less directly involved in the fraud. Perhaps for this reason, the firm was able…...
mlaWorks Cited:
No author. (2003). Securities Exchange Commission v. Tyco International Ltd. Securities Exchange Commission. Retrieved January 31, 2010 from http://www.sec.gov/litigation/complaints/2006/comp19657.pdf
Hellriegel, D. & Slocum, J. (2007).
Organizational Behavior. Mason, OH: Thomson Higher Education.
Kemmerer, C. & Shawyer, T. (2007). Tyco: A top-down approach to ethical failure. Working Paper Series.
"Yet earnings estimates have acquired a life of their own and often generate more attention from the media and analysts than a company's actual financial results." (Whalen, 2003).
More conservative critics of analyst conflicts rules believe that they are a step in the right direction, but view them as a work in progress. For example, the Sarbanes-Oxley bill, which mandated many improvements in corporate managers' financial practices, did nothing to reduce the unethical practice by many managers of communicating only with those analysts who cooperate with management's forecasts of the future (oni and Womack). This and other rules need strengthening.
Wall Street Journal reported in April 2003 that the brokerage firms of the top investment banks are still more likely to give optimistic research recommendations to their own banking clients, calling to question if new disclosure rules reapply protect investor clients (oni and Womack). With all the hoopla to protect investors,…...
mlaBibliography
60 Minutes - the sheriff of Wall Street (2002, October 6). Retrieved January 11, 2005 from James Hoyer Web site: http://www.jameshoyer.com/news_cbs_merrill_lynch.html
Boni, L. And Womack, K.L., Wall Street research: will new rules change its usefulness? Retrieved January 11, 2005 from The University of New Mexico Web site: hl=enhttp://66.102.7.104/search?q=cache:Vops0e1attQJ:www.unm.edu/~boni/FAJ_MayJune2003.doc+%22NASD+and+NYSE+rules%22+and+%22conflict+of+interest%22+and+%22not+enough%22&
Fleischman, D. (2003, March 6). Outline of new research analyst conflicts of interest rules. Retrieved January 11, 2005 from Security Industries Association Web site: hl=enhttp://216.239.63.104/search?q=cache:ETmwyiBBHrMJ:www.sia.com/ResearchManagement/pdf/ResearchOutline.pdf+%22NASD+Rule+2711%22&
Rayburn, K. (2004, Winter). Insecure securities. Impact. Retrieved January 11, 2005 from University of Louisville Web site: http://php.louisville.edu/advancement/pub/impact/winter2004/insecure.php
Though not empowered with the same legislative authority that the SEC can claim, FINA sets standards for stockbrokers and other financial industry professionals, and licenses individuals as well as oversees certain aspects of operations with regulatory eye (Little 2010; FINA 2010). Illegal trading or suspicious trading can lead to investigations by FINA that can then lead directly to legal problems for companies found to be in violation of laws and ethics guidelines, meaning that the securities issued by Holiday Inn could eventually face direct regulation by this body, and that the trading of Holiday Inn securities -- like other securities traded in the United States -- is always at least indirectly influenced by the standards and regulations established by FINA (Little 2010; FINA 2010).
Holiday Inn does not issue securities that are markedly different from any other company, and thus the stock this company issues are subject to no more…...
mlaReferences
FINRA. (2010). Financial industry regulatory authority official website. Accessed 10 August 2010. http://stocks.about.com/od/tradingbasics/a/Regulat011705.htm
IHG. (2010). Investor relations. Accessed 10 August 2010. http://www.ihgplc.com/index.asp?pageid=3
Little, K. (2010). "Who's watching your back in the stock market?" Accessed 10 August 2010.
(Dow Jones and Company, 2009). The DJIA can be used in three principal ways: as a yardstick, as a barometer, or as an investment.
When the DJIA is used as a yardstick, the goal is to measure performance from one period of time to another:
The most common use of an index by investors is to evaluate the performance of their own portfolios on a monthly or quarterly basis. This is the "benchmark" function of an index, and it constitutes the bogey that many investors try to beat with individual stock picks or with mutual funds. There is no official benchmark for the stock market. Each investor chooses his or her own. The only logical requirement is that the benchmark chosen should represent the part of the stock market that is targeted by the investor's portfolio. For example, if the investor dabbles in large stocks from a variety of industries, the…...
mlaReferences
H.J. Heinz Co. 2009. Shareholder Information. H.J. Heinz Company. Available from:
[August 28, 2009].http://heinz.com/our-company/investor-relations/shareholder-information.aspx
Dow Jones and Company. 2009. About the Averages: Overview. New York: Dow Jones and Company. Available from: [August 28, 2009].http://www.djaverages.com/?view=about&page=overview
E*Trade Financial Corp. 2009. Pricing. E*Trade Financial Corp. Available from:
The management of large organizations is a very crucial issue, whether they are government-related or not (Argyris, 1993; Argyris & Schon, 1978; Broom, Jackson, Harris, & Vogelsang-Coombs, n.d.; Brown & Brudney, 2003; Hatry, 1999; Haynes, 1999). Often, however, the government does not seem to realize that it must manage itself in the same way that a business would in certain aspects if it is to succeed and therefore it does not market itself to the public.
The spending that has been involved with the Department of Homeland Security is also crucial, because it has changed over time to reflect the needs and the realization of what it takes to make the Department work (Eggen & Mintz, 2003). This spending is important to discuss, because it indicates how much of the government's money - and by extension how much of the tax dollars of Americans - is going toward funding this…...
mlaWorks Cited
Argyris, C., (1993). Knowledge for action: A guide to overcoming barriers to organizational change. San Francisco: Jossey-Bass.
Argyris, C. & Schon, D.A. (1978). Organizational learning, a theory of action perspective. Boston, MA: Addison-Wesley.
Broom, C., Jackson, M., Harris, J., & Vogelsang-Coombs, V. (n.d.). Performance measurement: Concepts and techniques (3rd ed.), workbook. Washington, DC: American Society for Public administration.
Brown, M.M., & Brudney, J.L. (2003). Learning organizations in the public sector? A study of police agencies employing information and technology to advance knowledge. Public Administration Review. 63(1), 30-43.
In these exceptions, which may be a one-time transfer of funds from a 401k to an IA or to a mutual fund, the financial services firms need to create ethical safeguards to ensure the confidentiality and actual funds themselves are secure. The bottom line is that the financial services firms need to create a highly secure, customized and tightly integrated series of web-based online trading applications and tools to make sure individual investors can work to attain their investment goals.
Improvements for Online Trading as a Self-Service Strategy
There are many opportunities for improvement for Web-based online trading tools, starting with even stronger security specifically on the area of inter-fund transfers and the recording of transactions. Today many of these Web-based online applications store history only for 12 months, and do not provide an audit record back three or five years of all in-account transactions. This lack of multi-year audit capability…...
mlaReferences
AMR Research (2003) - Configuration is the Heart of Customer Fulfillment for Complex Product Manufacturers. AMR Research Report. Monday March 31, 2003. Retrieved from the Internet on April 19, 2007 at http://lwcresearch.com/filesfordownloads/ConfigurationIstheHeartofCustomerFulfillmentforComplexProductManufacturers.pdf
Columbus (2001) - Defining Your Direction in Guided Selling. AMR Research Report. October, 2001. Retrieved from the Internet on April 19, 2007:
http://www.lwcresearch.com/filesfordownloads/DefiningYourDirectioninGuidedSellin.pdf
Columbus (2002) - the Sell-Side E-Commerce Market: It's All About Integration. AMR Research Report. Monday April 1, 2002. Retrieved from the Internet on April 19, 2007:
How has the Securities and Exchange Commission (SEC) improved reporting measures for publicly held companies? What are the weaknesses in SEC procedures?
The SEC has amended its reporting requirements in order to eliminate, modify, or integrate certain disclosure rules. These changes are aimed at improving disclosure effectiveness. Simplifying compliance without the need for significantly altering the total mix of information that is provided to the investors. Improving this reporting measures will allow public companies to eliminate redundant and duplicative requirements that forced the companies to publish or report the same information in different manners. Eliminating duplicate reporting requirements will make it easy for public companies to provide information to investors and investors will find it easy to retrieve information. The SEC also aimed at eliminating outdated requirements that are not consistent with recent legislation.
While the reporting measures are aimed at improving reporting for public companies, it is feared that the SEC…...
This researcher rejects the existence of online communities because computer mediated group discussions cannot possibly meet this definition. Weinreich's view is that anyone with even a basic knowledge of sociology understands that information exchange in no way constitutes a community.
For a cyber-place with an associated computer mediated group to be labeled as a virtual settlement it is necessary for it to meet a minimum set of conditions. These are: (1) a minimum level of interactivity; (2) a variety of communicators; (3) a minimum level of sustained membership; and (4) a virtual common-public-space where a significant portion of interactive computer mediated groups occur (Weinreich, 1997). The notion of interactivity will be shown to be central to virtual settlements. Further, it will be shown that virtual settlements can be defined as a cyber-place that is symbolically delineated by topic of interest and within which a significant proportion of interrelated interactive computer…...
mlaBibliography
Al-Saggaf, Y. & Williamson, K. Online Communities in Saudi Arabia: Evaluating the Impact on Culture Through Online Semi-Structured Interviews. Volume 5,
No. 3, Art. 24 - September 2004
AnchorDesk Staff. (2000). Sign of Trouble: The Problem with E-Signatures.
Retrieved April 9, 2005, from ZDNet AnchorDesk Web site: zdnet.com.com/AnchorDesk/4630-6033_4204767.html?tag=printhttp://reivews-
" (Harman, Flite, and ond, 2012) the key to the preservation of confidentiality is "making sure that only authorized individuals have access to that information. The process of controlling access -- limiting who can see what -- begins with authorizing users." (Harman, Flite, and ond, 2012) Employers are held accountable under the HIPAA Privacy and Security Rules for their employee's actions. The federal agency that holds responsibility for the development of information security guidelines is the National Institute of Standards and Technology (NIST). NIST further defines information security as "the preservation of data confidentiality, integrity, availability" stated to be commonly referred to as "the CIA triad." (Harman, Flite, and ond, 2012)
III. Risk Reduction Strategies
Strategies for addressing barriers and overcoming these barriers are inclusive of keeping clear communication at all organizational levels throughout the process and acknowledging the impact of the organization's culture as well as capitalizing on all the organizational…...
mlaBibliography
Harman, LB, Flite, CA, and Bond, K. (2012) Electronic Health Records: Privacy, Confidentiality, and Security. State of the Art and Science. Virtual Mentor. Sept. 2012, Vol. 14 No. 9. Retrieved from: http://virtualmentor.ama-assn.org/2012/09/stas1-1209.html
Kopala, B. And Mitchell, ME (2011) Use of Digital health Records Raises Ethical Concerns. JONA's Healthcare Law, Ethics, and Regulation. Jul/Sep 2011. Lippincott's Nursing Center. Retrieved from: P85 P86 P87http://www.nursingcenter.com/lnc/cearticle?tid=1238212#P77
Securities and Exchange Commission (SEC) are one of the most well-known entities that regulate markets, protect investors and facilitate the capital market structure. The SEC was founded in 1934 in the wake of the Great Depression -- The SEC was created by section 4 of the Securities Exchange Act of 1934. The SEC was established by the United
States Congress as an independent, quasi-judicial regulatory agency during the Great
Depression that followed the Crash of 1929. Now, more than ever, first time investors turn to the market to protect their future income, send their children to college, pay for homes. The primary duty of the SEC is to promote sound market regulation, sustain economic growth and encourage capital formation.
The Capital Market strategy is one of many used by this entity. It is a market for securities (debt or equity), where business enterprises and governments can raise their long-term funds. It is defined…...
mlaReferences
S.E.C. (1982). "The Role on the Capital Market in the Structural Adjustment Programme (SAP)," Lagos, SEC Quarterly June, Vol 4, No 2.
Sanusi, J.O (1984). The Capital Market: A Boost to Economic development (The banking Aspect)" Seminar Paper on the Capital Market, Lagos.
Matthew Shane., 1970. Capital Markets and the Process of Economic Growth, 77 i.e. Journal of Finance, Voi. 25, No. 4. (Sep., 1970), pp. 950-951.
Strict Liability & Securities Law
Congress defined security laws to include investment contracts, but "investment contract" is not itself defined in law (Condomimiums as Investment Contracts under the Security Laws, 2011). An Eleventh Circuit court decision indicated "The test for an investment contract is whether the contract is (1) an investment of money (2) in a common enterprise (3) made with expectation of profits to be derived solely from efforts of others" (Condomimiums as Investment Contracts under the Security Laws, 2011). ecause law is lacking in adequate definitions, it is completely possible for a business owner to operate a business without fully understanding the laws that govern the individual practices.
The Trust Indenture Act of 1939 applies to debt securities such as bonds, debentures, and notes offered for public sale (The Laws That Govern the Securities Industry). The Securities Acts of 1933 and 1934 govern the disclosure of financial information through registration…...
mlaBibliography
White Collar Crime. (2008). Retrieved from Encyclopedia.com: http://encyclopedia.com/topic/white-collar_crime.aspx
Condomimiums as Investment Contracts under the Security Laws. (2011). Loyala's Institute for Investor Protection Major Appelate Court Decisions, 1(12),October.
Securities Fraud. (n.d.). Retrieved from Legal Information Institute: http://www.law.cornell.edu/wex/securities_fraud
The Laws That Govern the Securities Industry. (n.d.). Retrieved from Security Exchange Commission: http://www.sec.govb/about/laws.shtml
One possible essay subject related to case studies for SEC (Securities and Exchange Commission) and ACC (Accounting) could be the recent scandal involving the German fintech company Wirecard. Wirecard was once touted as one of Germany's biggest success stories, but it collapsed in 2020 after it emerged that the company had been involved in a massive accounting fraud.
The scandal raised serious questions about the effectiveness of regulatory oversight by the SEC, as well as the role of auditing firms in detecting and preventing financial fraud. It also highlighted the challenges of regulating the rapidly-evolving fintech industry, which often operates in....
SEC Case Study: The Fall of FTX
Introduction
The Securities and Exchange Commission (SEC) is the primary regulator of the securities markets in the United States. It enforces federal securities laws and regulates various financial institutions, including brokerage firms, investment advisors, and public companies. One recent SEC case that has garnered significant attention is the collapse of FTX, a cryptocurrency exchange founded by Sam Bankman-Fried.
Case Overview
FTX was founded in 2019 and quickly became one of the largest cryptocurrency exchanges in the world. However, in November 2022, FTX filed for bankruptcy after a series of disclosures revealed that it had commingled customer funds....
Impact of Management Compensation on Financial Reporting Quality
Management compensation is a crucial aspect that can significantly influence the quality of financial reporting. The alignment between compensation structures and financial reporting practices affects the incentives and behaviors of executives, which in turn impact the reliability and accuracy of financial statements.
1. Performance-Based Compensation and Financial Reporting Manipulation
Performance-based compensation schemes, such as stock options or bonuses tied to financial targets, create incentives for executives to manage earnings to meet or exceed these targets. This can lead to aggressive accounting practices and the manipulation of financial data to present a more favorable financial picture.
2.....
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