The Legal and Ethical Environment of Business Essay

The Legal and Ethical Environment of Business - Essay Example Adelphia, Home Store, and IM Clone systems, where CEOs and top officials in large corporations have been found guilty of fraud, improper accounting, and insider trading. Most of these officials have been convicted and face imprisonment for up to 25 years and tough fines payable to the Government for the personal profits that they have made (www.marketwatch.com). A large Insurance Company, AIG was also accused of bid rigging, fraud, and improper rigging practices and forced into making a large settlement (www.corporatenarc.com). The Company was able to settle in a civil suit and paid up $1.6 million, thereby avoiding the stiffer penalties that a criminal case could have brought upon the Company. It is also paying settlement amounts to investors who have been defrauded, as well as $100 million to the SEC. Since DWI is involved in many of the industries where there has been a prevalence of such scandals, it needs to improve its regulatory practices within the organizations in order to b e able to face up to the tough scrutiny of the public and Government agencies. Corporate leadership in DWI’s firms, in particular, must be held accountable for any fraudulent dealings and there needs to be a periodic system of inspection and accounting introduced, in order to ensure that DWI is not rocked by any financial scandals like other corporations. In order to address these problems of fraud AIG, for example, has introduced new business practices and creating new levels of transparency in the market for the benefit of the customers. (www.corporatenarc.com). Delta Airlines that is facing difficulties in fulfilling the terms of pension plans for its pilots has dumped its pension plans and has filed for bankruptcy protection in order to cover its promised payments to its pilots.(www.money.cnn.com). Company law and the securities market have been regulated in the United States predominantly under the Investment Company Act of 1940 and the Securities Act of 1933.