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Running Head: Turner_Regulatory Measures

Angenetta Turner

Regulatory Measures

Week 2 Assignment

OMM640: Business Ethics & Social Responsibility

Instructor: Erika O'Quinn

September 15, 2014

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Regulatory Measures

In todays business world we are constantly hearing about the unethical behavior that has
taken place within the organization. With that being said, Enron is always the top corporation
that pops into ones head when we talk about unethical behavior or misconduct. To help make
sure organizations stay within the guideline and reap consequence for their unethical behavior
and/or misconduct the federal government decided to help put regulations in place to help guide
ethics in organizations. There are three significant agencies that have been put in place to
regulate ethics in organizations such as the Federal Sentencing Guidelines for Organization
(FSGO), the Consumer Financial Protection Bureau (CFPB) and the Sarbanes-Oxley Act (SOX).
The Federal Sentencing Guidelines for Organization (FSGO), according to the Ethics
Resource Center, is a set of guidelines that encourages organizations to create "effective
programs to prevent and detect violations of law," and prescribe seven "types of steps" that
should be included in an effective program. An important part of this guideline is to make all
organizations responsible for any and all wrongful acts of their employees whenever that
employee acted in their official job capacity. It also expresses that the employer assumes this
responsibility whenever an employee presents unlawful behavior whether or not the organization
approve of it or not.
Consumer Financial Protection Bureau (CFPB) is a federal agency established under the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to enforce new consumer
financial laws designed to protect consumers from unfair, deceptive or abusive practices
(Business Dictionary). The CFPB, came into play due to the financial crisis the world faced
during the 2007-2010 years. It was created by President Obama to enforce financial regulations
calling for an overhaul in how financial institutions do business with consumers. This regulation
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was also found to help all the consumers that were facing the unethical, unregulated behavior
from financial institutions that was in possession of mortgages. These institutions were raising
home mortgages to unbelievable heights causing family to become homeless and not giving
individuals ways to make it right.
The Sarbanes-Oxley Act is legislation passed by the United States Congress to protect
shareholder and the general public from accounting errors and fraudulent practices in the
enterprise, as well as improve the accuracy of corporate disclosures (What is Sarbanes-Oxley).
The act was created after the Enron scandal that affected the entire country in some type of way.
The Sarbanes-Oxley Act is an act that protects individuals from illegal and unethical trading, like
Albert and his wife was doing in this weeks discussion assignment titled Resolving Unethical
Business Challenges. This act protects shareholders from falling stocks prices, when the
president knowingly use information from a companys insider informing them that the company
is in trouble of being purchased by another company. This behavior is unethical and is in total
violation of the Sarbanes-Oxley Act.
With the three different guidelines put in place by the government, we find that the main
purpose of them is to help eliminate white collar crimes that are taking place in corporate
America. The Federal Sentencing Guideline for Organizations is one of the legislatures
established for such unethical behaviors. Organization must be compliance with this legislation
by implementing and/or create some type of document that clearly lay out their ethical
expectations. The two major events that brought for these legislations were the Enron incident
and the loan and mortgage crisis that began in 2008. The Consumer Financial Protection Bureau
stepped up and corrected these situations to protect the consumer and/or innocent individuals.
The most recent incident in which they are now working with is the Home Depot Credit card
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data breach. This is the same type of situation that Target customers faced earlier this summer
when there was a breach in their credit cards and/or debit card transactions. The CFPB, has
impacted business by making sure that they give consumers necessary information needed to
make the best financial decisions. This also ensures that consumers know the price up front and
the fine print is clearly laid out to them. The Sarbanes-Oxley Act has impacted the way
corporations do business by requiring them to transform their financial system, making the way
they do business more ethical.
In conclusion, whenever corporation continue to misuse and abuse their powers, the
government will continue to step in to ensure that consumer and the public is protected from
their unethical behavior. According to Ferrell, these regulatory measures provide motivation for
organizations to develop core practices throughout their organizations to ensure ethical and legal
compliances. This methodology include access to communications, compensation, social
responsibility, corporate culture, leadership, risk, stakeholder perception, and the more subjective
aspects of earnings, corporate governance, technology, and other significant areas (Ferrell &
Fraedrich, 2013). At the end of the day the implementation of these regulations helped to
develop and improve ethical behaviors in organizations throughout corporate America. Leaders
must understand that they will always be looked at to achieve the highest levels, but they should
always keep in mind what is ethically acceptable or legal for all involved. Yet, knowing when
the final sentence is announced there will be a hefty price to pay from a legal aspect.

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Business Dictionary. Retrieved from

Ethics Resource Center. (2005). Federal Sentencing Guidelines. Washington, DC: Ethics
Resource Center. Retrieved from
Ferrell, O.C., Fraedrich, J., & Ferrll, L. (2013). Business Ethics & Social Responsibility (9

Mason, OH: Cengage Learning

Sarbanes Oxley Act. Retrieved from