law 421 contemporary business law week 5 DQ
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?
Class in chapter 22 there is the mention of white collar
crime. What is white collar crime and why is it called this?
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