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The SOX Act Case Study

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Millions were prospering at the height of a new century while ENRON continued to blaze past its competitors and turning some of the most impressive earnings ever seen. Trading divisions of ENRON were “executing nearly $350 billion in trades” and seemed to have their hand in every transaction. The company was listed on Fortune Magazines Most Innovative company list up until 2001 when ENRON stock was at an all-time high. Sitting on the throne for many years the company was leading the energy market. Earnings reports showed a superfluous amount of funding across the board. Within a period of six months, their perfect financial situation began to decompose at a sharp rate. For the first time in over four years, the company reported a loss of …show more content…

SOX was in place and ready to receive the first test in US law. Cases could be placed against any of the CFO’s across the large scandals sweeping the nation at the turn of the century. United States of America v. Richard M. Scrushy became the first case against a CFO to face the wrath of SOX. Within 7 years, from 1996-2002, Richard M. Scrushy managed to provide stockholders with $2.74 billion worth of fictitious income coming out of HealthSouth Corporation and the SOX Act had was ready to be tested. Scrushy and other executives at HealthSouth discussed falsifying financial documentation as well as a “scheme to fraudulently inflate the company’s operating results and financial condition, including the net income and earnings per share that HealthSouth reported to its Board of Directors, employees, the SEC, bond underwriters, market analysts, bankers, the media, and the investing public.” SOX Act was able to pinpoint and target Scrushy for almost every fraudulent activity he was involved in at HealthSouth and Richard Scrushy was indicted on 85 separate counts to include conspiracy, money laundering, false certification, and securities fraud. Scrushy lost almost every asset he owned from his home, his Picasso painting, and even his own personal

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