Sociology

The notion that the government may have expected too much from Enron executives, given the scale of the abuses committed by the executives and the scope and scale of the resulting damage, is an extraordinarily difficult position to substantiate.  This case represented the largest bankruptcy in American history, a bankruptcy nearly all academics agree was primarily caused by greedy ambition and accounting frauds to inflate corporate balance sheets, and the better argument is that responsibility for stakeholder losses should be attributed to the American government for weak government oversight and Enron executives for unethical and fraudulent leadership actions and decisions.  The available evidence strongly suggests that Enron executives deserved to be punished, that this type of case is precisely why government needs to more carefully regulate accounting and financial practices that affect other parties, and that this type of fraudulent criminal enterprise in fact creates more victims than isolated crimes such as theft, burglary, and even embezzlement.  The scope of the damage is staggering.

As an initial matter, as a publicly traded company, Enron executives cannot escape responsibility by claiming to operate in a private marketplace.  The shares are publicly traded, held by individuals and organizations such as pension funds, and there are clear and unequivocal ethical and legal duties to a variety of stakeholders.  The primary duty is one of financial transparency, manifest most directly in the form of accurate accounting records, and these duties were deliberately and repeatedly violated.  One leading scholar of the Enron case, noting the pervasive fraud inherent in Enrons business operations, has gone so far as to argue that This situation should have raised questions-the same questions raised by Ponzis promise to increase an investors money by half in a three-month period. Like Ponzi, Enron had answers. Enron presented itself to the world as a market-maker, a firm that excelled at creating new markets  HYPERLINK httpwww.questiaschool.comPM.qstaod5036039648(Baird  Rasmussen, 2002). 

Enron used exaggerated claims of revenue sources, it deliberately hid corporate liabilities in order to trick investors in investing in Enron, and it used this invested money to pretend that profits were paying dividends rather than this newly invested money.  The corporate executives largely operated a Ponzi scheme and two parties are responsible.  The Enron executives lied, perhaps believing that profits would increase in the future to hide their fraudulant representations and actions, and the American government was lax in the form of enforcing existing rules.  Justice was never truly served because so many investors relied on the frauds and lost substantial amounts of money.  It can be argued that savvy institutional investors should have examined Enrons claims more critically rather than being enticed by the promise of unrealistically high returns because they had experts with the skills to perform such examinations for individual investors, on the other hand, it would be hard to assign any responsibility because they are ethically and legally entitled to rely on the accuracy of Enrons financial and ethical representations.  The main government response to Enron, and a number of similar corporate scandals, was to enact the Sarbanes-Oxley Act.  The stated purpose was to preempt state law and, more specifically with respect to the behavior of corporate executives and accounting practices,
The Act has been said to be unprecedented because, in addition to regulating disclosure and securities trading, the traditional jurisdiction of U.S federal securities laws, the law also addresses matters of substantive corporate governance and executive fiduciary responsibility  HYPERLINK httpwww.questia.comPM.qstaod5022588374(Shu-Acquaye 585).

Whether these new laws and regulations will prevent future Enron-type situations is doubtful when corporations have close relationships with government officials and when profit becomes the sole barometer of success in corporate operations.  Enron was an ethical disaster, a legal disaster, and it would hardly be surprising if more Enron situations occurred when the economy revives.