Trade Regulations Essay

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Regulatory Measures

The history of business and government excesses and the subsequent public, legal and political reaction is quite a long one and the response to criminal misconduct has led to governance practices, legal sanctions, compliance standards and different cultural transformations. Over the last forty years there have been major events within the American Business society leading to subsequent legislations and regulations that have shaped up how organizations carry out their business operations. These legislations that came about are such as the Federal Sentencing Guidelines for Organizations (FSGO), Sarbanes-Oxley Act (SOX), and the Consumer Financial Protection Bureau (CFPB). There are various events that paved way for the creation of each of these regulatory measures.

In 1984, the sentencing Reform Act was enacted and it contained a set of mandatory federal sentencing guidelines. The United States sentencing commission was formed as part of the act and it was charged with the responsibility for provision of certainty and fairness in any sentencing in order to avoid sentencing disparities that were not wanted while at the same time ensuring that there is sufficient flexibility to allow individualized sentencing in cases where mitigating and aggravating factors warrant the process. In 1991, the Federal Sentencing Guidelines for Organizations (FSGO) was developed as a response to the sentencing Reform Act. This was the pioneer of the concept of sentencing punishment mitigation for the effective compliance program and cooperation (Kaplan, & Walker, 2012).

There is a variety of complex factors which led to the creation of conditions and culture whereby a series of large corporate frauds took place between the year 2000 and 2002. Some of the highly publicized frauds are such as WorldCom, Enron and Tyco that brought to light significant problems with conflict of interest and the practices of incentive compensation.

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It is the analysis of the complex and contentious root causes of these frauds that contributed to Sarbanes-Oxley Act (SOX) being passed.

Consumer Financial Protection Bureau (CFPB) was created out of the worst financial crisis since the great depression occurred. This crisis had pushed financial systems into a lot of distress and had severe consequences such as plunging of home values, fall of personal savings, loss of jobs and defaulting of consumers on mortgages and loans. Prior to the crisis, federal oversight of consumers had been spread out among different agencies but they lacked the jurisdiction and necessary tools to make sure consumer financial markets were functioning properly. This led to the consolidation of consumer financial protection responsibility in one agency; the Consumer Financial Protection Bureau (CFPB).

These laws have a great impact on business ethics in different ways. One of the FSGO objectives is the promotion of corporate citizenship and guiding organizations towards a more ethical business culture. An amended guideline by FSGO requires that executives and directors take an active role in management compliance as well as the ethics program as well as the importance of promoting an organizational….....

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