On December 2, 2001, Enron declared bankruptcy. Immediately regulators cracked down, passing the Sarbanes-Oxley Act which requires executives to sign off of accounting statements and to be criminally liable for their accuracy. Ten years later, have things improved?

By some indication, things have only gotten worse. A decade later, we still read similar newspaper headlines. Last week Mary Schapiro, chairman of the SEC, told congress that the SEC is investigating the accounting procedures of MF Global and how it was able to be exposed to risky foreign sovereign debt.
Tom Fowler of the Houston Chronicle reported that Sam Buell, one of the first prosecutors on the federal government’s Enron Task Force and now a law professor at Duke University, said that he was dumbfounded by the extent to which Enron’s lessons have been lost. “We thought Enron was the 9/11 of the financial markets, that it was a cataclysm that would change the world. The financial collapse of 2008 is evidence that it didn’t. Enron was the canary in a coal mine warning about the systemic problems that we needed to look at, particularly where it comes to risk management.”

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