3.6.3 Developments since Enron (2002)

In the last seven years the ways of independent directors of large corporations have fulfilled their duty to develop the strategy and monitor the corporation's affairs, has attracted wide spread and critical political attention. Given the WorldCom and Enron debacles, the recent meltdown in the US financial sector, the dependence of workers on equity investments to secure their retirements, the globalisation of American law principles and the complexity of managing corporations with international operations, legal standards used to evaluate whether directors have complied with their duties are the subject of growing national US and world interest. US policymakers know and realize this. The reaction to WorldCom and Enron was the enactment of the Sarbanes-Oxley Act of 2002, which also led to reform of SEC regulations and NYSE and NASDAQ Rules. The Dodd-Frank Act will also have substantial influence.1 The effect on US independent directors has been to prompt them to perform their duties more diligently. Directors of foreign companies listed on US stock exchanges have felt obliged to devote more time and energy into monitoring their risk management and their accounting systems, and following SEC requirements or recommendations.