After WorldCom's scandal was exposed, Arthur Andersen claimed that the auditors' work depends on the management's honesty and integrity. But no one can accept this.
If we rely on the management's honesty and integrity, what's the point of auditing a company? This is an obvious problem. If they change the audit firm, they will find out immediately. Arthur Andersen is one of the world's top audit firms, but they did not discover this?
Most people felt that Arthur Andersen had found out about Feng Yu's scheme and had colluded with the management of WorldCom, Enron, and other companies. Although there was no evidence, Arthur Andersen was charged with obstruction of justice and fined 500,000 USD.
A mere 500,000 USD is nothing to a top audit firm like Ernst & Spencer. Their annual revenue is more than 500,000 USD. After all, they are one of the world's top accounting firms. Just in North America alone, they have many regular clients.
The second penalty is to ban Arthur Andersen from auditing in the US for the next five years. Arthur Andersen had no choice but to "announce" that they will give up all their US auditing business and withdraw from the industry. If they don't have any clients after five years, what's the point of keeping this business?
After that, Arthur Andersen closes all their offices in the US and starts to lay off their employees. Arthur Andersen's employees dropped from 30,000 to less than 3,000. The 1,300 regular clients also terminated their contracts with Arthur Andersen and switched to other accounting firms.
After Enron's scandal was exposed, Arthur Andersen had a grudge against Arthur Andersen. Now, WorldCom is in trouble, and everyone says there are problems with the companies audited by Arthur Andersen. Who dares to hire Arthur Andersen?
In fact, even if Arthur Andersen wasn't banned from doing related business, it would have fallen from the top of the world to an ordinary company. It was just that it was a little worse now. Arthur Andersen had gone from being famous to infamous.
To cover up their audit problems, Arthur Andersen had destroyed part of the audit reports on Enron and WorldCom. Regardless of the reports or electronic files, they were very important. It was obvious that this was obstruction of justice. They only had themselves to blame for their downfall today.
WorldCom is finished. Their share prices had just started to recover, but now, it starts to fall again. Because WorldCom is going bankrupt, the share prices of many companies that had dealings with WorldCom started to fall.
For example, Nasdaq is one of WorldCom's biggest clients. Time Warner and many US government departments are also involved.
Also, WorldCom has so many creditors, and they will not be able to get back the money they had lent to WorldCom.
This also causes the banks' shares to fall. This causes a chain reaction, and the US stock market is in trouble again.
Of course, other than the investors, Bush also felt unlucky.
Damn it, he had just turned the economy around a little and relied on American companies to sign so many contracts with foreign countries to stabilize the stock market. In the end, he had just gone abroad for a visit, and something happened again!
Enron and WorldCom were his competitors and also Clinton's loyal supporters. You all cheated me out of my money, and now you want me to be the scapegoat?
Many states' pension funds are invested in Enron, WorldCom, etc. Even if they did not invest in these two companies and invested in other companies, they will still suffer losses because of the stock market crash.
The state pensions had lost a few hundred million USD at most, and at least a few tens of millions of USD. These were all big events that could shake Bush's position.
Bush wanted to deal with WorldCom, but WorldCom is doomed. So, Bush turned to Arthur Andersen's other clients.
If he can prove that the previous boom is fake, he might be able to increase his support rate.
Bush ordered Arthur Andersen to investigate further, and he found some problems with Arthur Andersen's clients.
Of course, these are all financial problems, and some of the World's Top 500 companies are involved. For example, Tektronix International, Smart Electric, Schiller Company, etc., and Feng Yu did not expect Microsoft to be involved!
Those companies that are not in the World's Top 500 are also involved.
After this news broke out, Microsoft and other companies' share prices started to fall. The entire US stock market, Asia, and Europe stock markets also fell.
Of course, the US stock market plunged the most, followed by Europe and Asia. Asia's share prices fell by about 3% on average, and Europe's share prices fell by about 5%. The US stock market fell by more than 8%.
And it had only been a day. It seemed that this decline would continue for a while.
Bush was dumbfounded. He felt he had shot himself in the foot. He had only wanted to shift the blame to his predecessor, Bill Clinton. But now, there are too many scandals, such as bank fraud, securities analysts deliberately misleading consumers, etc., all of which are reported.
The US needs a new impetus to help its economy recover. But the continuous exposure of financial scandals, including banks and securities companies, had dealt a heavy blow to the US economy.
Many investors had lost confidence in the US investment market. Without these funds, it will be hard for the stock market to rebound, and how can the economy recover? Including US Treasury bonds, the US stock market is being dumped.
The US stock market is in a bear market!
Europe and Asia's stock markets stabilized after a few days. The funds withdrawn from the US had been invested in these areas.
The US is the unluckiest country for Bush's investigation!
Now, people say that US CEOs, accounting firms, and securities analysts cannot be trusted. The only person they can trust is God.
Most of the companies with financial problems also have problems with their CEOs. Many people say that some companies, like Microsoft, had falsified their profits. This is because the US society worships their CEOs and heroism. This is not good and must be remedied.
To save the market, Bush's administration introduced a new policy. All the CEOs and CFOs of companies with revenues of more than 1 billion USD must guarantee in writing that the company's latest financial statements are correct. This way, if the financial statements are still wrong, they will be sued for fraud and even be prosecuted by the government!
Wall Street supports this policy, and the Dow Jones index rose by more than 300 points on the day this policy was introduced.
Feng Yu does not care about this. He is with Ralph to meet the Chairman of AMD.
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