YOU BE THE JUDGE WRITING PROBLEM World-Wide Coin Investments Ltd. sold rare coins, precious metals, camera equipment, and Coca-Cola collector items. Its stock was registered with the SEC under the 1934 Act. Joseph Hale was the controlling shareholder, chairman of the board, CEO, and president. World-

Wide’s independent auditor warned Hale that the company’s faulty system of accounting procedures was causing problems with inventory control. Furthermore, the auditor could not document transactions, and it had found that the books and records of the company were inaccurate.

Is World-Wide in violation of the Foreign Corrupt Practices Act? Argument for the SEC:

Without exception, all reporting companies are required to maintain accurate books and records. Argument for World-Wide: This is a small company, and the cost of such an elaborate internal control system would bankrupt it.