Regulatory Compliance and Protection of Investors and Consumers
Assignment Content
Resources
U.S. Securities and Exchange Commission (SEC)
U.S. Environmental Protection Agency (U.S. EPA)
Occupational Safety and Health Administration (OSHA)
U.S. Consumer Product Safety Commission (CPSC)
Scenario: Your solar panel manufacturing and installation company, Solar Co. Inc., is in the process of “going public,” has underwritten its Initial Public Offering (IPO), and filed its registration statement with the U.S. Securities and Exchange Commission. Your current executive team has asked you to create a plan ensuring compliance with a variety of regulations that will apply to Solar Co. as the company goes public and continues to expand.
Write a discussion in no more than 175 words about each of the four federal agencies listed above in which you:
Explain the role and function of the agency.
Identify at least two significant regulations enforced by each agency relevant to Solar Co.’s business (totaling eight regulations).
Provide recommendations for Solar Co. to ensure compliance with each of the regulations including specific action items to be taken by employees and management.
Regulatory Compliance and Protection of Investors and Consumers
Introduction
The United States Exchange provides an opportunity for local and foreign companies to benefit from its large investor base. The liquidity of the capital market ranks among the best and it is a strong indicator of the state of the global economy. The first initial public offer in the New York Stock Exchange was in 1783. Since then, the country has maintained a stable market through strict regulations to guide and oversight of the players. Regulating the capital market is a handful and it requires the intervention of a multiagency approach. Different federal agencies with distinct mandates evaluate the activities in the market to maintain stability and order.
U.S. Securities and Exchange Commission (SEC)
The United States Security Exchange is an agency charged with the responsibility of maintaining order in the security markets. The agency protects investors from manipulative and fraud practices in the market. The primary function of the SEC is to oversight individuals and organizations in the security markets (Li, & Liu, 2017). Secondly, the SEC establishes the rules and regulations for the securities. For instance, some of its regulations oblige companies to supply investors with registration statements and financial reports.
The main regulation by the SEC compels all organizations selling securities in the United States to register with the entity. Some companies are exempt from the registration after meeting certain requirements. Secondly, SEC compels the public disclosure of all the material facts regarding a public offering in the security exchanges. Investors rely on the accuracy of the facts provided to make informed decisions.
Solar Company should first familiarize itself with the regulations by the SEC. In the Initial Public Offering, the SEC appears to be the main agency charged with processing companies and introducing them to the market. A close collaboration between the regulator and the organization can enhance the effectiveness of the offering.
U.S. Environmental Protection Agency (U.S. EPA)
The Environmental Protection Agency has a mission to protect the health of humanity and that of the environment. The federal government established the agency to correct the public environmental concerns in the 1950’s and the 60’s (Li, & Liu, 2017). The agency relies on research and regulating potential environmental pollutants to execute its mandate. All entities involved in processing, manufacturing and the use of chemicals are under the scrutiny of EPA. Additionally, EPA determines the levels of chemical substances tolerable in foods, water and animal feeds. The agency enforces its authority through sanctions and fines.
The EPA regulates Safer Choice Program and it is responsible for informing consumers on the safest chemical products available. The agency uses its own scrutiny methods to determine the safety level of the products. Secondly, EPA enforces regulations through the energy star program. The regulator Helps consumers to make the right choice in the assessment of the energy efficiency of appliances. Additionally, the agency prevents and responds to oil spills and pollutant air emissions.
As an entity concerned with energy, Solar Co Inc. should align its quality and standards with the requirements of EPA. To gain the trust of investors, the company needs to fulfil the environmental statutory regulation. In that regard, an approval by EPA is the best assurance to the investors.
Occupational Safety and Health Administration (OSHA)
The occupational safety and health administration is an agency charged with the responsibility of ensuring the safety and health of workers in the country. The agency operates under the United States Department of Labor (Billings, & Lewis‐Western, 2016). The agency sets the standards for safe and healthy working conditions. OSHA also provides trainings, Helpance and outreach to organizations. Most employees in the United States are under the jurisdiction of OSHA.
The main regulation of OSHA is the general duty clause. All organizations have a responsibility to ensure each of the employees has the relevant working equipment and he or she is free from any hazards that are likely to result to injury or death. Some of the specific regulations by OSHA include that of head protection. Workers in construction sites or other accidental prone operations need to wear a hard hat while on duty. Organizations that fail to enforce the regulations are liable to fines and the revocation of licenses.
Investors prefer entities that take good care of their employees. A positive appraisal by OSHA is a good sign for potential investors in the initial public offer. Additionally, the organization should meet the standards for the safety of their employees. A comfortable and confident human resource is more productive and efficient.
U.S. Consumer Product Safety Commission (CPSC)
The Consumer Product Safety Commission is an agency that protects the public from hazardous products. The agency focuses more on items that pose the risk of fire, electrical malfunction, chemical exposure and mechanical failures (Barth, Landsman, & Taylor, 2017). Additionally, the agency is keen to check on product that might pose a danger to children. CPSC investigates and recalls products that fail to meet the regulation requirements.
One of the regulations by CPSC bans the production and the use of extremely flammable adhesives. The regulation protects consumers from burns. Secondly, the law requires labelling of all hazardous materials. The commission has the authority to ban the importation of all products that it considers hazardous.
Solar Co Inc. should go through all the regulation by the CPSC. As an entity that produces consumer products, Solar Company should adhere to all the safety standards. A safety scandal can disrupt the process of going public. Investors are reluctant to join into controversies. The safety of the consumers is critical. The reputation of a consumer company determines its profitability levels.
References
Barth, M. E., Landsman, W. R., & Taylor, D. J. (2017). The JOBS Act and information uncertainty in IPO firms. The Accounting Review, 92(6), 25-47.
Billings, M. B., & Lewis‐Western, M. F. (2016). When Does Pre‐IPO Financial Reporting Trigger Post‐IPO Legal Consequences?. Contemporary Accounting Research, 33(1), 378-411.
Li, B., & Liu, Z. (2017). The oversight role of regulators: evidence from SEC comment letters in the IPO process. Review of Accounting Studies, 22(3), 1229-1260.
