Essay preview
A Crooked Government Agency Story
Table Of Contents
Description Page
Executive Summary………………………………………………………………….3 Background Information……………………………………………………………4 The Fraud Case………………………………………………………………………6 The Perpetrators……………………………………………………………………..9
Legal Ramifications….......................................................................................9 The Fraud Triangle………………………………………………………………….10
Incentives/Pressures…………………………………………………………..10
Opportunities…................................................................................................10
Rationalizations………………………………………………………………11 Suggested Remedies…………………………………………………………………12 Works Cited Page…………………………………………………………………...13
Executive Summary
I chose to write about the fraudulent activities concerning the SEC being accused of destroying evidence for writing assignment #4- Fraud Paper. The SEC is the U.S. Securities and Exchange Commission, and its agenda is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The primary fashion that the SEC achieves its mission is by forming and enforcing regulations that set the standards for the public disclosure of financial information by public companies. The primary areas of enforcement activity are insider trading, accounting fraud, and false or misleading investment information. The Fraud
The SEC is accused of destroying the records of thousands of investigative documents during the peak of the 2008 financial crisis. The accusations extend all the way back to 1993. The Whistleblower
A whistleblower is a person who informs the public or the authorities of suspected fraudulent or illegal misconduct that has occurred in a government sector, a public/private organization, or a company. In the case of the Securities and Exchange Commission’s scandal, a 13-year veteran by the name of Darcy Flynn came forward with the allegations against the SEC. He sent a letter to congress explaining that the SEC had been destroying documents of preliminary investigations once they are closed, for almost two decades. These documents related to investigations on major banks and companies such as Goldman Sachs, Deutsche Bank, and AIG. The Fraud Triangle
The fraud committed by the U.S. Securities and Exchange Commission displays all the elements of the fraud triangle. SEC officials were offered high ranking jobs and salaries as incentives/pressures, opportunities to commit fraud were frequent, and they rationalized the incidences as following policy. Remedies
Solutions to this dilemma are difficult to define. The main solutions is not to hire SEC executives that held jobs with major banks or companies that the SEC is in charge to enforce.
Background Information
The U.S. Securities and Exchange Commission is a regulatory government agency that supervises a large part of the U.S. economy. Specifically, the SEC supervises the Wall Street banks and companies where there are trillions of dollars in market activity that affects every aspect of our economy (Cussen). The SEC was born from President Roosevelt’s Securities Acts of 1933 and 1934. After analyzing the economic factors that caused the 1929 market crash, President Roosevelt first passed the Securities Act of 1933 that set rules for all initial public offerings and primary issues of securities (Cussen). Soon after, the Securities Act of 1934 was passed in order to police the secondary securities market, therefore creating the Securities and Exchange Commission.
The purpose of the SEC is “to protect investors, prevent securities fraud, and assist in the creation of new capital for businesses and investments. It also ensures that all securities transactions are placed in a fair and orderly manner” (Cussen). So many financial services and products have been created in the last couple decades that the SEC has become in charge of overseeing. These publically available products include variable annuities and life ins...