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Primary Roles of the SEC

Please answer the following questions.

1. What are three primary roles of the SEC? How does the Sarbanes Oxley Act augment the SEC's role in managing financial governance? Do you think that businesses are more ethical after the passing of the Sarbanes Oxley Act? What examples are there to support you answer? Other than Enron and Tyco, what other companies had some scandals? What are the safe guards to stop them?

2. Which ratios measure a corporation's liquidity? What are some of the problems associated with using financial ratios? How would the Dupont analysis overcome some of these problems?

Solution Preview

The primary role of SEC is to regulate the securities market and ensure that it operates in a fair manner. It regulates securities related firms such as brokers, investment bankers, etc and ensure that securities market professionals deal with their clients in a fair and orderly manner. It regulates corporates and ensure that such corporations conduct their operations with full integrity and transparency and disclose all information. The SEC achieves these objectives by numerous means, such as making it necessary for companies disclose material business and financial information; implementing regulations or rules with which those involved in the purchase and sale of securities must comply; and filing lawsuits or taking other ...

Solution Summary

The solution is 442 words on the Sarbanes Oxley Act and liquidity-measuring ratios.