Über die Autorin bzw. den Autor

By John Hasnas

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

Trapped

CATO INSTITUTE

Contents

1. Introduction............................................................................1Part I The Evolution of White-Collar Crime2. The Nature of White-Collar Crime........................................................113. Problems of Enforcement.................................................................154. The Solutions-Corporate Criminal Responsibility.........................................235. The Solutions-New Offenses..............................................................316. The Solutions-The Organizational Sentencing Guidelines..................................45Part II The Effect of the Federal Campaign Against White-Collar Crime7. Five Ethical Dilemmas...................................................................598. Organizational Justice..................................................................619. Privacy.................................................................................6510. Confidentiality........................................................................6911. Trust..................................................................................7512. Ethical Self-Assessment................................................................8113. Conclusion.............................................................................85Notes......................................................................................97Index......................................................................................117

Chapter One

Before reading this book, please take the following multiple-choice quiz:

1. You are the chief executive officer (CEO) of Marsha Tudor Styles Inc., one of the country's largest retailers of products for homemakers. MTS is highly profitable and is closely identified with its founder and chair of the board of directors, Marsha Tudor, who also publishes a magazine and hosts a television show about homemaking. Recently, the Securities and Exchange Commission investigated Tudor for suspected insider trading for selling $1 million of stock in a company owned by a personal friend, just before a sharp decline in the price of that stock. In the course of her voluntary cooperation with the investigation, Tudor stated that she sold the stock pursuant to a pre-established stop-loss order. When news of the investigation became public, Tudor asserted her innocence of insider trading on a national news program. Although Tudor has not been charged with insider trading, she has been indicted for obstruction of justice for telling federal investigators that she sold her stock pursuant to a stop-loss order, as well as for securities fraud for attempting to prop up the value of MTS stock by falsely proclaiming her innocence to the public. You have known Tudor for many years and tend to believe that she is innocent of the charges, although you cannot be entirely sure. In this situation, which of the following constitutes the ethically appropriate action for you to take in your capacity as CEO?

a. Publicly support Tudor and offer whatever aid the corporation can give her in her effort to clear her name.

b. Take no action. This matter does not concern the corporation.

c. Consult with corporate counsel and immediately take steps designed to protect the corporation against any potential civil liability and to preserve its defenses against any potential criminal charges.

d. Ask Tudor to resign as chair of the board of directors until her legal troubles are resolved and cooperate with the government's criminal investigation of Tudor to the extent that doing so is consistent with preserving the company's legal defenses and respecting all promises of confidentiality, including those granted by corporate counsel under the attorney-client privilege.

e. Authorize the corporation to plead guilty to securities fraud and aid the government's criminal investigation of Tudor in every way, including waiving the corporation's attorney-client privilege and turning over records of all Tudor's appointments, phone calls, e-mails, and confidential consultations with the corporate counsel.

2. You are a senior executive at the Stone Fund, a large mutual fund company. The majority of investors in the Stone Fund are small investors, but the fund has several large investors as well as several institutional investors. Until recently, Gordon Gekko was one of the fund's most successful manager-brokers. He was responsible for acquiring most of the large investors in the fund. He apparently did this by allowing several of these investors to make trades after 4:00 p.m., which is illegal. Budd Fox, a junior broker who worked for Gekko, processed many of the late trades. Fox, who had been hired right out of business school, was not aware at first that he was doing anything wrong. Gekko's high status in the company, his forceful personality, and his assurance that the late trades were perfectly acceptable and were standard operating procedure in the industry led Fox to carry out Gekko's orders without qualm. Eventually becoming suspicious, Fox approached Stone Fund's corporate counsel in confidence to inquire about the legality of his actions. On learning of the late trades, Stone Fund immediately fired Gekko and reported his actions to the Department of Justice and the Securities and Exchange Commission. Which of the following constitutes the ethically appropriate action for you to take with respect to Fox?

a. Assign him to work with a broker who can serve as an ethical mentor, and use the legal resources of the company to help him defend himself against any criminal charges that may be brought as a result of his association with Gekko.

b. Allow him to continue working for the company, but do not use corporate resources to aid him in defending any criminal charges that are brought against him personally.

c. Fire him.

d. Fire him and recommend that the company report his activities to the Department of Justice and Securities and Exchange Commission.

e. Fire him and recommend that the company not only report his activities to the DOJ and the SEC but also offer to cooperate with the prosecutors in building a case against him by waiving the company's attorney-client privilege and turning over to the government any evidence that could possibly aid in establishing his guilt.

3. You are the new CEO of Endrun Inc., a very troubled corporation. Acting without the knowledge of Endrun's former CEO, Kevin Lie, the company's chief operating officer (COO) and chief accounting officer (CAO) had been using improper accounting practices to disguise the size of the company's debt and inflate the company's profits. When this fraud came to light, Endrun was forced to restate its earnings for the past several years, causing the company to suffer serious losses in the third and fourth quarters as well as a sharp decline in the price of its stock. The COO and CAO have since pled guilty to securities and wire fraud, and Lie resigned as CEO. You stepped in to try to staunch the bleeding and revive the company. You have just learned...