... , thus improving the company's ability to borrow more funds. The recorded gain increases its return on assets thereby enhancing its earnings performance and stock prices, as well as its ability to borrow. Enron made special purpose entries to conceal loses and increase its ability to borrow money. ... could not repay the loan, Enron pledged to make up the short falls in cash. Enron investors did not follow the three cardinal rules for investing. (1) Know your investments: Two of the nations most respected financial investors, Warren Buffet and Peter Lynch, have long recommended that peo...

• Word Count: 1893
• Approx Pages: 8
• Grade Level: Undergraduate

... the case of insider trading this is impossible as if insider trading were practiced by everyone the stock exchange could not work as it does today. Unless people had a secret tip they would not bother investing and if no one invested then there would be no market for shares. This lack of investor ... as when one hires the services of a plumber one expects and knows that there is an imbalance of information, when one invests in the stock market, they expect and demand that the employees or potential insiders have divulged any important information that might affect their decision as it i...

• Word Count: 1331
• Approx Pages: 5
• Grade Level: Undergraduate

... know depends on who you are a laudable goal. For years, Wall Street investors have learned of key corporate information in private conversations with corporate officials before the rest of the investing public. This is a practice that is called, "selective disclosure". The SEC argues that the favored few could use this information for the benefit of their ... stock holdings or the holdings of their customers. Unfortunately in the views of the SEC, the average investor was generally the loser in this exchange. (Oppenheimer) This is the intended effect ... ...

• Word Count: 807
• Approx Pages: 3
• Has Bibliography
• Grade Level: Undergraduate