Public Policy Analysis Essay Example | Topics and Well Written Essays - 2500 words - 1

Public Policy Analysis - Essay Example It imposes penalties for violation of security laws at higher rates than were applicable earlier. It also increases resources for the Securities and Exchange Commission. The Act is applicable to all the companies whether American or foreign if they are required to file annual and periodical reports with the SEC. This public policy analysis is to have a better appreciation of regulatory relationship between government and corporation (Zameeruddin, 2003). (Lovik, Merkel, & Bowser, 2006) The enactment of the legislation is timely in order to protect the interests of the investor from corporate fraud and to require corporate executives to enhance corporate ethical standards. These are with a view to make the US securities market robust enough to be a safe place for investors to invest and do business. It is argued that SOX is an essential policy tool to realize these objectives. The Act comes into force to address the market failure as a result of scandals such as Enron and others. The Enron scandal alone justifies the legislation to address the market failure characterized by the following consequences. Bankruptcy: 20,000 employees were rendered jobless and deprived of health insurance. Average severance pay was $ 4,500 and top management executives were paid bonuses exceeding $ 55 million. Employees’ retirement funds of $ 1.2 billion were lost. Retirees did not get their $ 2 billion retirement funds. Company’s top executives en-cashed their stocks wor th $ 116 million. Criminal Charges: There were 15 guilty pleas, 6 convictions, 1 acquittal and 11 cases not decided. Three California based stock traders entered their guilty plea for wire fraud. 4 Meryll Lynch executives confessed to fraud in the Nigerian Barge case. Enron’s stock hit a high of $ 90 in 2000 and fell to $ 1 in 2001. 29,000 employees of auditing firm of Arthur Anderson lost their jobs. And Enron’s shareholders sued the company and their banks for $ 20 billion (Jesso, 2009). SOX