Business Scandals in Corporate America
Corporate executives in handcuffs. A declining stock market with losses of approximately $8 trillion in investor wealth over a two-year period. Reform legislation to overhaul accounting procedures. Resignations at the Security and Exchange Commission. $1 billion in fines for Wall Street brokerage firms. Corruption reaching throughout corporate America all the way to the White House's leading economic advisers. These are some of the top business stories as the new millennium dawned.
These incidents helped rewrite the history of United States business. A decade of unparalleled prosperity came to an end in the spring of 2000 although confidence in the stock market itself began to unravel in late 2001 and early 2002, when the largest accounting frauds in U.S. history were uncovered. Several major companies filed for bankruptcy after admitting that their financial statements had concealed losses and the scandals sent stocks into steeper declines, extending a bear market that had begun in 2000. The Enron Corporation, an energy trading firm that had become the country's sixth largest company, was the first to admit that it had issued fraudulent financial statements going back over a five-year period. Then WorldCom, Inc., a giant telecommunications company, set the record for accounting fraud. WorldCom first revealed that company financial officers had concealed more than $3 billion in business losses. Later revelations upped that figure to more than $9 billion.
As the scandals sent stocks plummeting, millions of Americans who were heavily invested through their 401(k) retirement plans in the stock market had to postpone retirement and rethink their investment strategies. According to one estimate, American workers lost $ ...