Enron's meteoric rise was even more impressive because, according to Lay, Enron was a prime example of a company that could be profitable and ethical. He proclaimed himself the keeper of the company's vision and values, which he defined as "respect, just treating other people the way we want to be treated, we're sincere, we mean what we say, we say what we do." Enron's code of business ethics articulated a philosophy of honesty and transparency. Lay also embraced the concept of community stakeholders and Enron's responsibility to groups beyond its shareholders, including its neighbors and employees. So what went wrong?
Class I think everyone would agree that there are business ethics and there are personal ethics. In light of the recent business scandals it seems that in the business world there is a constant battle between these two definitions. The culture of the business and the parties who have a vested interest are not just limited to the owners of the business. Have you experienced an example of an ethical culture in your place of work. Please highlight the good and the bad. (Please do not post the details of the company or individuals' names). Do you think that a person's personal ethics should spill over into the ethics of the business? Why or why not?
ImClone Systems was a publicly traded biopharmaceutical company founded by Samuel Waksal who also served as the company's CEO and chairman of the board. In December 2001, ImClone and the public markets were anxiously awaiting FDA approval on an experimental cancer treatment drug called Erbitux that ImClone had developed. Because of his position at ImClone, Waksal had advance knowledge that the FDA would not be giving approval for the use of the drug. Before the public announcement by FDA, Waksal called his stockbroker, Peter Bacanovik from Merrill Lynch (now a subsidiary of Bank of America), and ordered him to sell substantial amounts of ImClone stock from his personal portfolio. Waksal also urged his immediate family to sell their ImClone stock as well.
Bacanovik had other brokerage clients that owned ImClone stock, including Martha Stewart, the star of her own media conglomerate and the CEO and chair of the board for the publicly traded holding company for her empire called Martha Stewart Living/Omnimedia. Bacanovik instructed his assistant to tip Stewart to the fact that Waksal had sold a substantial portion of ImClone stock. After the tip, Stewart instructed Bacanovic to sell all her ImClone shares. The next day, ImClone announced publicly that the FDA had not approved the use of Erbitux and ImClone's stock dropped by more than 20 percent. By selling when she did, Stewart avoided losses of over $45,000.
Based on our text where Martha go wrong?
Class what is the difference between common stock and preferred stock?
In the wake of the infamous corporate fraud and malfeasance scandals beginning in 2000--most memorably Enron,8 MCI WorldCom, Global Crossing, HealthSouth, and Tyco--a public outcry and a growing lack of investor confidence in corporate financial disclosures caused Congress to overhaul the entire corporate governance regulatory structure by passing the Sarbanes-Oxley Act (SOX Act) of 2002. What is the significance of the Sarbanes-Oxley Act?
Courts have also held that the authorities generally do not commit a Fourth Amendment violation where they obtain evidence by virtue of seeing an object that is in plain view of a government agent who has the right to be in the position to have? that view. This is called the plain view doctrine. Class what is an example of the plain view doctrine?
Crime in the United States is normally governed by state statutory law. In some cases federal law also applies. Class what are the major differences between civil lawsuits and criminal cases? How does double jeopardy apply to this scenario?