Legal/ Regulatory Issues
Within these case study's, there are three current or potential
legal/regulatory issues that may have an impact on a public offering.
The first would be Jane's embezzlement of corporate funds during
her position as a bookkeeper. a The second was Bobs ability to reverse
engineer the recipe of Fred's Miracle Cough syrup. And the third is
the potential sexual dissemination lawsuit filed by Tammy against
Fred and the company.
The fact that Jane was able to embezzle money from the company
since the foundation of it, and was able to do so without being found
out will be a red flag for many people looking to invest in an IPO. Fred
and Sally need to look into a financial management system that will
help to manage their financials and flag fraudulent or illegal activities.
It would also be wise to not allow any one person complete control
over the financial accountability of the company. Multiple book
keepers or accountants should be hired to give a proper checks and
balances of powers and resources. Also, it may be in their best
interests to hire a third party firm to audit the company periodically to
prevent this in the future. If the company can show that they are
taking their financial accountability very seriously to prevent any
further mishaps, then it will improve their standing with investors.
Fred and Sally should also look into patenting the formula of his
cough syrup if possible. This will guarantee that the company has the
sole right of ownership to the formula and prevent others from doing
what Bob did. The laws surrounding trade secrets only provide so
much protections, but a patent provides much more security going
forward, especially since the company is gaining popularity. A
patented formula will also assure investors that what they are
investing in is unique and worthy of investment.
And finally there is the sexual discriminations lawsuit. The U.S, Equal
Opportunity Commission or EEOC enforces two laws that protect
individuals from sexual discriminations at work. There is the Title VII
if the Civil Rights act that "prohibits an employer from treating you
differently, or less favorably, because of your sex, which is defined to
include pregnancy, sexual orientation, and gender identity" (Sex
Discrimination | U.S. Equal Employment Opportunity Commission, n.d.) .
Then there is the "Equal Pay Act, which requires employers to give
male and female employees equal pay for equal work" (Sex
Discrimination | U.S. Equal Employment Opportunity Commission, n.d.). I
do not believe Tammy can win this lawsuit against Fred unless she
can prove beyond a reasonable doubt that she was just as, if not,
more than qualified than the competing accountant hired for the
same position. Based on the information at hand, it appears the
decision was not based upon the sexual orientation of who applied
for the job, but who was more qualified for that position. If Tammy
can prove she is qualifies and wins the case, then this will be a
massive hit to the company and will be a big challenge when going
public.
Sex Discrimination | U.S. Equal Employment Opportunity Commission.
(n.d.). Www.eeoc.gov. https://www.eeoc.gov/youth/sex-
discrimination
