Enron’s Progeny: Dodd-Frank and Beyond
Additional regulatory changes/additions from recent years shows that the public is still affected by the actions of Jeffrey Skilling and the Enron collapse. Most prominently, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 has dedicated hundreds of pages of new regulation to provide liability for and prevent future occurrences of, fraudulent executive actions such as that of Mr. Skilling. Title IX Subtitles E&G of the Act specifically address Executive Accountability, Compensation and the Strengthening of US Corporate Governance Laws. Most notably relating these changes to a post-Enron world is the fact that these regulations extend to non-financial services companies, but all public corporations. In addition to increased civil liability and enforcement tools for directors and officers (as well as credit-rating agencies) these new regulations expand the jurisdiction and enforcement authority of the SEC, subjects violators to new and enhanced penalties, and increases the collateral consequences for “bad actors”. Notably (and in relation to the bankruptcy revisions cited above) there are new “clawback” provisions to allow for the recapture of erroneously awarded executive compensation.
Collectively, it is clear that nearly all post-2001 major financial regulation is inspired by, or at least partially related to, the massive fraud perpetrated by Jeffrey Skilling and Enron. By implementing these strict new policies, the federal government hopes not only to de-incentivize future actors from following in Skilling’s shoes, but moreover, to provide a clear jurisdictional route for reclaiming the rightful assets of those defrauded by any such future scandals.