Worldcom Case Study

On January 27, 2004, Martha Stewart stood on trial facing charges of conspiracy, obstruction, securities fraud, and lying to investigators in connection with the sale of her stock in ImClone, a biopharmaceutical company (Gibson, Warin, & Gassaway, 2008). Just three years earlier, Stewart sold her stocks that she had within the company. After two days, the organization 's stock dropped 16 percent when the Food and Drug Administration (FDA) said it had rejected the company’s new project of a drug, Erbitux, which was meant to be for cancer treatment (Leite, 2012). Stewart had controlled 4,000 shares of ImClone and by selling (or getting rid of, depending on who you ask) her shares, just before the FDA 's declaration, she kept away from

The Gilded Age was the time Civil War and the World War 1. It is also known for the

From the era of Reconstruction to the end of the 19th century, the United States underwent an economic transformation marked by the maturing of the industrial economy, the rapid expansion of big business, the development of large-scale agriculture, and the rise of national labor unions and industrial conflict. America was

Lehman Brothers were an investment bank involved in transactions worth billions of dollars and one of the most powerful investment banks in the world.

DEFENDANT GERARD WARRENS, INDIVIDUALLY, CONDUCTED AN UNREGISTERED SECURITIES OFFERING IN VIOLATION OF FEDERAL AND ARIZONA SECURITIES LAW THROUGH FRAUD AND MISREPRESENTATION

Bernie Madoff has been accused of a violation of title 17 code of federal regulations Section 240. 10B - 5. Madoff was accused of defending it, unwillfully, willfully and knowingly, by the use of mean and instrumentalities, in connection an entry interstate commerce with the purchase and selling of securities, would and could use and employ manipulative and deceptive devices. Bernie Madoff mislead misrepresented himself to invest in businesses to take part of his and engaged and his illegal Enterprise for profit no true return on investment.

Something is rotten in U.S.: at the very least in the realm of economics (and perhaps even politics). It appears that there is an ongoing successful drive to privatization of everything: schools, roads, prisons; programs such as Social Security, and Medicare. What motivates this drive is a belief foisted on the public that the private sector is more efficient than the public sector. This belief grows out of the notion that the quest for profit is a regulating factor: efficiency reduces costs. The public sector, on the other hand, is motivated by a completely different objective—to increase the general welfare. Example, when there is a flu outbreak, the private sector has no incentive to find a vaccine, absent the prospect of profits. The public

Named after its creators Senator Paul Sarbanes and Representative Michael Oxley, the Sarbanes–Oxley Act of 2002 (SOX) was enacted on July 30, 2002 by President George W. Bush. .Sox is also known as the Public Company Accounting Reform and Investor Protection Act of 2002. It is widely known as the most significant reform since the formation of the Securities and Exchange Commission of 1943. Consequently major corporate scandals such as Enron, Worldcom and Tyco led to The Sarbanes Oxley Act. The act sets strict reforms to the financial practices and corporate governance of public corporations, accounting and management firms. The act also contains provisions which impede private companies from destroying evidence during a federal investigation.

During the WorldCom debacle, for every opportunity Betty Vinson was given to be courageous, the fear of rebelling against an authority figure as well as the fear of losing her job discredited her authenticity. My analysis concludes with applying selected self-reflection questions to Vinson’s case and my own journey on becoming authentic.

It is very hard to say that SOX would prevented the scandal but they would have being exposed sooner because of the Sarbanes-Oxley section and titles rules and regulation such as; Titles II the auditors partner rotation; Title III, the responsibility or reporting accurate financial corporate reports. They reported depreciation expenses of garbage trucks as a salvage values, and subjective to other assets that did not have any value. Title IV the financial disclosures of financial reports was overstated or understated in some reports to inflates a high profit margin. The Titles VIII, the alteration and destruction of records that would protect the

1. I think what needs to be the focus on is Bernie Ebbers ambitions and greed to be one of the world’s most powerful individuals in the communication industry was ultimately his downfall. Ebber ability to falsely represent a transformational leadership style and his ability to persuade others to follow him was his strength. His country boy cowboy style and appealing personality made a bigger than life character. He was deemed someone that can do no wrong, in short, he was idealized by those who knew him. Ebber projected a very powerful persuasiveness. (Kark, hamir,and Chen (2003). Bass 1995 and Avolio and Bass 2000 study on transformational leadership is a perfect example. Ebber possessed the traits associated with transformational leadership, individualized consideration, intellectual stimulation, idealized influence, and inspirational motivation.

Throughout the case, it can be seen how Cendant Corporation was performing activities that dealt with the interactions of income smoothing. The main cause of performing with Income Smoothing was to make their shareholders and investors believe that they had a professional and ethical operation running. Income smoothing can best be represented as how either gains or losses from a certain period are taken into a good or bad period with losses or no profits. Income smoothing throughout this case was used as an unethical practice performed by Cendant Corporation to achieve financial stability and falsify numbers to make the investors believe they had premium stocks when in reality it wasn’t what was really occurring which would then lead to the

Bernie Madoff created Bernard L. Madoff Investment Securities in 1960 by purchasing penny stocks not listed on the New York Stock Exchange (NYE) (Ferrell, Fraedrich, & Ferrell, 2013). He was a well-respected financier, until his fall from grace. Now he has been convicted of operating a massive Ponzi scheme that went undetected for decades.

WorldCom, once known as one of the most powerful telecommunication organizations of the world, is now studied as a case of a fraudulent company that carried out unethical financial activities to cover its weakening position in the market. After some aggressive investment decisions, the company started to witness huge financial pressure. The management used various forged accounting entries to conceal its weakening position. Cynthia Cooper, Vice President Internal Audit, discovered the unethical activities and raised the issue with the management and relevant departments and received bitter responses. She carried out internal audits in her own capacity with her colleagues and compiled evidence against fraudulent activities.

According to Pearce and Robinson (1997), “strategy is the overall plan for deploying resources to establish a favorable position it comes from the Greek word “Strategos” meaning to lead (agein) an army(stratos) into war. It is a course of action, including the specification of resources required, to achieve a specific objective.”