* * From the e-Activity, examine ethical behavior within firms in relation to financial management. Provide two (2) examples of companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved. *
Freddy Mac Scandal
In the Freddy Mac Scandal, over 5 billion dollars in earnings were misstated. The SEC alleges that the corporation engaged in an accounting fraud from 2000 to 2002. The manipulation of earnings occurred by incorrectly accounting for various derivative instruments of the firm as well as manipulating the accounting for loan origination costs and reserves for losses. There was a SEC investigation, which lead to the firing of the President, Sr. Vice President and CFO. There was $125 million in fines.
Fannie and Freddie were created by Congress to make mortgages affordable and pump cash into the market by buying blocks of home loans from lenders and bundling them into securities for sale to investors worldwide. Due to this lots of people lost their homes or the interest rates were one thing, but turned out to be another later on down the line. The interest rates got so high in certain states that people could not afford the mortgage payment due to the fact the interest and tripled in some cases.
American Insurance Group Scandal (2005)
American Insurance group is a multinational insurance company. Massive accounting fraud was uncovered in the amount of 39 billion dollars, there was reports of bid rigging and stock price manipulation. CEO Hank Greenberg was the one that was accused of this scandal. Greenberg allegedly booked loans as revenue, steered clients to insure with whom AIG had payoff agreements, and told traders to inflate stock prices. There was a regular SEC investigation and a possible whistleblowing that was taken place.
There was $1.64 million paid out by AIG. The CEO was fired, but no criminal were filed.
In my opinion the penalty for both companies were not harsh enough. Criminal charges should have been filed against both parties.

* * From the scenario, recommend two (2) actions that Trevose Fitness Center (TFC) could take in order to raise capital that will, in turn, enable it to reach its expansion goals. Defend your response. Support your recommendation with two (2) real-world examples of successful implementations of these actions.

To raise more capital, I would look for outside investors. Offer employees a chance at buying stock within the company. I would also do research on the west coast to see what types of services that the other gyms offer. Having a daycare at the fitness centers would be a way to expand and increase capital.

References

http://accounting.smartpros.com/x59491.xml

http://www.nbcnews.com/id/21027918/ns/business-us_business/t/freddie-mac-settles-accounting-fraud-charges/#.VpLCaGfSnIU