Deragulation was lobbied for hard on wall street during the Bush Presidency. The public was lead to believe that loosing the rules on corporate practices would lead to more business and therefore more job opportunities. In some cases this actually worked. The problem came in when the Ceo’s and CFO’s got greedy and used there knowledge to inaccuraelty report their companies financial positions. Like all thieves the leaders of the companies that got caught paid for there crimes with their jobs and in many cases there freedom. One of the first major corporations to get was Waste Management Inc. This Houston based company was the largest Waste Carrier in the Nation. Though the company was an industry leader, they began to use fraudulent accounting practices. Between 1992 and 1997 refused to record necessary expense to cover failed business dealings(Schneider 2005). In 1998 waste management restated its earnings for the previous five years by $1.7 billion. The Securities and exchange commission filed suit against the company’s founder and Chief executives . Waste management agreed to pay 26.8 million to settle the lawsuit. Aurther Anderson, the company’s accounting firm also paid a 7 million dollar settlement after being accused of knowingly aiding the Waste management in the fraud (Schnieder 2005).
The Waste Management case would not be the last time Accounting firm Aurthur Anderson would come under fire from the Securities and Exchange commission. In 2001 energy company Enron suddenly collapsed under the weight of its own fraudulent accounting practices. Once considered by Fortune magazine as “ Americas most innovative company”, the Houston based company perpetrated one of the biggest frauds in U.S. history. Top Leaders within the company used accounting loopholes to hide huge amount of debt and reported falsidied balance sheets. After being turned in by a company employee the SEC started an investigation. Shareholders lost 74 billion dollars, employees lost there retirement accounts and many employees lost their jobs. In 2006 Chief executives Ken Lay and Jefferey Skilling were found guilty of conspiracy and fraud (Dealbook.com, 2012). Ken Lay died awaiting sentencing, and Jefferey Skilling was sentenced to 24 years in federal prison. Top accounting firm arther Andersen also paid the ultimate price for the accounting scandal, the U.S. Government found the firm guilty of fraud because they handled the auditing of Enron’s books . Arthur Andersen filed bankruptcy in 2001.
Only a year later another business scandal would further erode the confidence of the public. Worldcom Inc. was a telecommunications giant in the 1980’s and 1990’s. A failed merger with Sprint combined with an industry slow down caused company stock prices to decline. Little did anyone within the company know that during this time of prosperity Worldcom CEO Bernard Ebbers was using company stock to finance other personal business ventures. When the margin calls on those personal ventures could not be covered by the declining Worldcom stock. Ebbers borrowed 400 million from the company but was unable to cover his margins, leading to his removal in 2002.