Posts Tagged ‘ethics’

Embezzlement is…

Monday, July 25th, 2011

Embezzlement is taking something for personal gain that you’re supposed to be looking after for someone else.

It often happens in small amounts over time, and can sometimes go undetected for years. This is why accounting is so important – and why we need watchdogs like the U.S. Securities and Exchange Commission (SEC) to growl at offenders.

Examples of embezzlement include someone in charge of a trust or an investment fund snagging some of the money in their care, or those at the head of a nonprofit tweaking the books so that everything looks normal… while dollars secretly slip out the back door.

Conscious Consumerism is…

Friday, July 8th, 2011

Conscious consumerism is being aware of where your money really ends up when you spend it. It’s the practice of purchasing goods and services that the consumer (you) considers to be produced in an ethical manner.

Money leaves a social and environmental footprint wherever it goes. So if a company makes a habit of spilling oil in the ocean or refusing to give its employees benefits, you’re unknowingly saying “yes!” to all that by purchasing their stuff.

On the flip-side, conscious consumers are aware of all this and avoid products that do harm to or exploit humans, animals or the natural environment. They not only favor ethical products but also boycott merchandise and companies that act unscrupulously.

A Whistleblower is…

Friday, June 3rd, 2011

A whistleblower is someone who finds out that a person or organization is doing something wrong and reports it to the authorities.

For example, if you’re working at a coffee shop, and you see your co-worker stealing from the cash register, telling your boss about it would make you a whistleblower. There are laws that say that you can’t be fired for being a whistleblower – so even if you get someone really important (like your boss) in trouble, they can’t fire you for telling the truth.

Even the Most Respected Investors in the World Make Mistakes

Wednesday, May 4th, 2011

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(credit: jmv)

You may not have heard yet, but there’s been some interesting drama in the house of the country’s most-worshipped investor – the Oracle of Omaha, Mr. Warren Buffet. One of the top execs at his company (Berkshire Hathaway) seems to have, well, cheated at the game. David Sokol looked like he was next in line to replace Buffet when he eventually retires. But then he pulled a little thing called insider trading.

He bought a bunch of shares in a company, and then convinced Buffet that Berkshire Hathaway should buy that company, which raised the price of the shares and made Sokol a tidy profit. Unfortunately for everyone, that’s illegal. (For the record, Sokol so far denies doing anything wrong.)

There are many ways the company could have handled it – they could have tried to cover it up, or denied the whole thing and given Sokol a big bonus. But to his credit, Berkshire’s famous leader just fessed up. At the company’s annual meeting, where company executives meet with investors, explain their decisions, and take feedback, Buffet basically said that his top aide had done a terrible thing. He also heaped some blame on himself, saying that he wasn’t skeptical enough when Sokol came to him with the proposal.

Now Sokol is out of a job and the company is moving forward. Easy as that. The truth is, bad things happen all the time. But in business as in the rest of life, all it really takes to make things right again is to take responsibility for what happened, fix what you can fix, and move on.

A Refreshing New Wall Street Scandal

Wednesday, April 27th, 2011

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(credit: REUTERS/ Shannon Stapleton)

Ah, spring! Baby birds stretch their wings, trees release deadly spores, and Wall Street awakens from its long post-Ponzi slumber. You know, Ponzi. Scheme. Ponzi scheme. Madoff?

This guy.

But we digress. Today’s news is about Raj Rajaratnam, the founder of a successful hedge fund called Galleon Group. He’s been accused of insider trading – this is, unfairly using information from outside sources in order to make a big profit for his company (and himself).

Here’s what you need to know about Bernie and Raj:

  • 1. Madoff has already been tried, convicted, and sent to prison for 150 years. Raj is just on trial – and he’s still innocent until proven guilty. If he is proven guilty, though, he’ll be in the clink with Bernard for up to 25 years.
  • 2. Madoff ran a Ponzi scheme – he collected money from new investors and handed much of it over to existing investors, calling it a return on their investment. In other words, he just moved the money around instead of investing it. It involved a huge network of people, funds, customers, billions of dollars, and many, many handshakes.
  • Galleon Group is accused of insider trading by using a small network of tipsters from different companies. These tipsters [allegedly] shared valuable corporate secrets with Galleon, and Galleon [allegedly] used that information to make a killing on the trading floor. All very fine line behavior.

What would you do if someone gave you valuable information about a potential investment win?

The Government Says Your Life Is Worth Saving…

Thursday, March 3rd, 2011

“WASHINGTON — As the players here remake the nation’s vast regulatory system, they have been grappling with a subject that is more the province of poets and philosophers than bureaucrats: what is the value of a human life?

The answer determines how much spending the government should require to prevent a single death.

To protests from business and praise from unions, environmentalists and consumer groups, one agency after another has ratcheted up the price of life, justifying tougher — and more costly — standards.

The Environmental Protection Agency set the value of a life at $9.1 million last year in proposing tighter restrictions on air pollution. The agency used numbers as low as $6.8 million during the George W. Bush administration.”

What do you think?

How much is YOUR life worth? (We’re not just talking about your net worth, either!)

Philosophers Take On the Ethics of Big Banker Bonuses

Friday, February 18th, 2011

You may have an opinion about the compensation practices of Wall Street firms, but what would Aristotle do?

We had to look across the pond to get an answer, but the BBC has done a pretty bang-up job of using classic philosophy to talk about modern issues. And the comments below the story are just fantastic.

Aristotle aside, what do you think about the big bonuses? Does your opinion change after reading the article?

Pay-to-Play is…

Friday, August 21st, 2009

Pay-t0-play is essentially the practice of exchanging money for access to or the privilege of participating in certain activities. Sometimes it is in reference to the actions of government officials or politicians to award benefits to a business or individual. For example, the owner of a road construction company might give a politician some money – maybe through campaign contributions or maybe just cash in a suitcase – to make sure his company gets a big government contract to build a new highway. There are all sorts of campaign finance and other laws to try and prevent this practice.

A Pump and Dump is…

Thursday, August 20th, 2009

A “pump and dump” is an investing scam in which con artists use false or misleading statements to get investors to buy up a lot of a particular stock that the scammers also own. If a lot of people buy the stock, the price of the stock generally goes up. The con artists can then sell theirs at an inflated price, after which the stock price usually falls again, causing the other investors to lose their money.

A Boiler Room is…

Thursday, August 20th, 2009

A boiler room is a bank of telephones, usually set up by a broker, from which salespeople make calls to potential investors and pressure them to buy stocks. This is generally considered an unethical practice.