Banking operates in a complex system. Key players in the system include the regulators, the banks, and the end customers. They are all in a dance together. The moves of one party have consequences for all the others. Unfortunately, despite good intentions, there is little evidence that of any of the players can actually see the dance they are part of - they only see their own perspective and react accordingly. They are essentially blind to the impact on the whole system.
This short paper explores the themes of the blind dance of regulation. It starts with the flaws in the regulatory paradigm, and discusses the reactions of banks and customers to the regulator’s moves.
Insider Lease Agreements (Series: Fairness Issues in Real Estate-Based Bankru...Financial Poise
It is a common play in real estate to create a separate operating entity to serve as a tenant and execute a lease between the owner of the property and himself. Typically, this happens in assets which serve as a real estate-based business, such as a retail property. The structured enables the operator to reduce the taxable income of the business and also provide a liability shield for the property owner.
This arrangement can lead to some ethical issues, should the property owner become distressed. For example, is the lease amount above market and therefore being used to inflate the property valuation? Is rent actually being paid? Is there a proper lease in place or just an internal handshake? Attorneys need to understand the set-up in order to know what is in bounds and what is outside the lines.
To view the accompanying webinar, go to:https://www.financialpoise.com/financial-poise-webinars/insider-lease-agreements-2021/
Banking operates in a complex system. Key players in the system include the regulators, the banks, and the end customers. They are all in a dance together. The moves of one party have consequences for all the others. Unfortunately, despite good intentions, there is little evidence that of any of the players can actually see the dance they are part of - they only see their own perspective and react accordingly. They are essentially blind to the impact on the whole system.
This short paper explores the themes of the blind dance of regulation. It starts with the flaws in the regulatory paradigm, and discusses the reactions of banks and customers to the regulator’s moves.
Insider Lease Agreements (Series: Fairness Issues in Real Estate-Based Bankru...Financial Poise
It is a common play in real estate to create a separate operating entity to serve as a tenant and execute a lease between the owner of the property and himself. Typically, this happens in assets which serve as a real estate-based business, such as a retail property. The structured enables the operator to reduce the taxable income of the business and also provide a liability shield for the property owner.
This arrangement can lead to some ethical issues, should the property owner become distressed. For example, is the lease amount above market and therefore being used to inflate the property valuation? Is rent actually being paid? Is there a proper lease in place or just an internal handshake? Attorneys need to understand the set-up in order to know what is in bounds and what is outside the lines.
To view the accompanying webinar, go to:https://www.financialpoise.com/financial-poise-webinars/insider-lease-agreements-2021/
Datascram is being called a massive “Datascam.” Engineers cut corners and, as it turns out, data is not deleted forever. Instead, once deleted, it resides on a Nigerian server where it is sold to the highest bidder. As the company prepares to shut its doors, new questions emerge about Damian Diamond’s role in the fiasco and whether he could be held personally responsible for the company’s potentially criminal activities.
BUSINESS LAW REVIEW- 2022: Defending White Collar Crime-101Financial Poise
While white collar crimes don’t usually carry the same stigma or penalties as violent crime, the consequences of a conviction, or even an allegation can be devastating. Leaving prison time aside, the business may also face investigation, prosecution and possibly, the risk of reputational damage, financial loss and unwanted exposure.
As governmental enforcement of laws against those accused of white collar crime increases, companies need to understand how to avoid unknowingly acting in ways that may be unlawful, how to prevent and detect potential employee misconduct, and how to react if misconduct does occur.
Part of the webinar series: Business Law Review 2022
See more at https://www.financialpoise.com/webinars/
Current Issues in Securities RegulationNow Dentons
Mark Evans, a partner in the FMC Toronto office, was invited to speak at the Second Annual Securities Symposium this month about current issues in the area of Securities Regulation.
How to Avoid Malpractice & Disciplinary Actions - General Do's and Don'ts (Se...Financial Poise
This webinar presents basic practice pointers to avoid malpractice and disciplinary actions, and how to respond to claims of malpractice or unethical behavior if they arise. The panel also discusses the role that malpractice insurance plays in these situations and the ramifications of a malpractice judgment or disciplinary action. Model Rules addressed may include: those that govern the client-lawyer relationship (Rules 1.1 through 1.10; 1.13; and 1.16); those that that speak to transactions with persons other than clients (Rules 4.1 through 4.4); those that govern the responsibilities of managing and supervisory lawyers, subordinate lawyers, non-lawyer assistance, independence, unauthorized practice of law, and multijurisdictional practice (Rules 5.1 through 5.5); and those that govern communication, including advertising and solicitation of clients (Rules 7.1 through 7.5).
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/how-to-avoid-malpractice-disciplinary-actions-general-dos-and-donts-2021/
Privacy Breaches - The Private Sector Perspectivecanadianlawyer
Discusses issues that arise in organizations when faced with a privacy breach. Compares attitude and approach of organizations with those of privacy regulators.
LEGAL ETHICS – BEST PRACTICES 2022 - How to Avoid Malpractice & Disciplinary ...Financial Poise
This webinar presents basic practice pointers to avoid malpractice and disciplinary actions, and how to respond to claims of malpractice or unethical behavior if they arise. The panel also discusses the role that malpractice insurance plays in these situations and the ramifications of a malpractice judgment or disciplinary action. Model Rules addressed may include: those that govern the client-lawyer relationship (Rules 1.1 through 1.10; 1.13; and 1.16); those that that speak to transactions with persons other than clients (Rules 4.1 through 4.4); those that govern the responsibilities of managing and supervisory lawyers, subordinate lawyers, non-lawyer assistance, independence, unauthorized practice of law, and multijurisdictional practice (Rules 5.1 through 5.5); and those that govern communication, including advertising and solicitation of clients (Rules 7.1 through 7.5).
Part of the webinar series: LEGAL ETHICS – BEST PRACTICES 2022
See more at https://www.financialpoise.com/webinars/
ESSAY ON SECTION 5 INFORMAL PROCESSES AND DISCRETION (Due 11.docxbridgelandying
ESSAY ON SECTION 5: INFORMAL PROCESSES AND DISCRETION (Due 11:55 pm, May 13)
Essays should be 4-6 double-spaced pages. They should be written using only lectures and reading materials provided on Moodle. Identify the sources for specific facts, concepts, and quotes by simple parenthetical references. Since you are only to use class materials, the instructor should easily be able to identify the source.
For the essays, you cannot “cut and paste”. Use the materials from class only and be sure to provide a simple reference, such as (Powerpoint) or (Library of Congress).
Answer all parts of the chosen question. Demonstrate that you have reviewed and understand any relevant information in that section’s materials.
When useful to the answer, incorporate details such as case names, author’s names, facts, and particularly specific terms or jargon important to that subject.
The essays should be thematic. Sentences should be complete.
Always address each part of the question. Always include specific details, terms, and cases that properly fit into the analysis.
SCENARIO: You work for the Oregon Liquor Control Commission(OLCC) in the Recreational Marijuana Licensing Office(RMLO). You have many applicants and the place is short-staffed since you loaned workers to the Unemployment Division.
You have two scheduled video meetings today. The first is with a Ms. Eleanor Rigby. Her e-mail says that she is an 80-year old grandmother who needs some extra income to cover her grandson’s tuition. She wants to explore whether it would be a good idea for her to open a marijuana dispensary in Monmouth.
The second meeting will be with Bill Sellsmore from Curaleaf, a marijuana business worth well over $500 million. Sellsmore is interested in getting the OLCC to guarantee the licensing of ten new retail outlets before they invest in Oregon anymore.
While the basic law is that dispensaries must be at least 1,000 feet from a school, there is the possibility for the RMLO to grant limited exceptions. These are based on agency discretionary judgement that the retail facility will not operate in a way that attracts attention from students.
Here are the questions you must answer. If possible, connect your answers to the scenario above.
1. How important are informal processes to public administration? What factors influence the outcomes of informal processes, such as the meetings you have scheduled?
2. What happens if you provide inaccurate advice during these meetings and Rigby or Sellsmore make a bad business decision as a result?
3) How do the courts generally review agency discretionary actions, as demonstrated by the federal court? What could the RMLO get wrong and have a licensing decision overturned in judicial review?
ESSAY ON SECTION 5: INFORMAL PROCESSES AND DISCRETION (Due 11:55 pm, May 13)
Essays should be 4-6 double-spaced pages. They should be written using only lectures and reading materials provided on Moodle. Identify the sources for specific f ...
ESSAY ON SECTION 5 INFORMAL PROCESSES AND DISCRETION (Due 11.docxdebishakespeare
ESSAY ON SECTION 5: INFORMAL PROCESSES AND DISCRETION (Due 11:55 pm, May 13)
Essays should be 4-6 double-spaced pages. They should be written using only lectures and reading materials provided on Moodle. Identify the sources for specific facts, concepts, and quotes by simple parenthetical references. Since you are only to use class materials, the instructor should easily be able to identify the source.
For the essays, you cannot “cut and paste”. Use the materials from class only and be sure to provide a simple reference, such as (Powerpoint) or (Library of Congress).
Answer all parts of the chosen question. Demonstrate that you have reviewed and understand any relevant information in that section’s materials.
When useful to the answer, incorporate details such as case names, author’s names, facts, and particularly specific terms or jargon important to that subject.
The essays should be thematic. Sentences should be complete.
Always address each part of the question. Always include specific details, terms, and cases that properly fit into the analysis.
SCENARIO: You work for the Oregon Liquor Control Commission(OLCC) in the Recreational Marijuana Licensing Office(RMLO). You have many applicants and the place is short-staffed since you loaned workers to the Unemployment Division.
You have two scheduled video meetings today. The first is with a Ms. Eleanor Rigby. Her e-mail says that she is an 80-year old grandmother who needs some extra income to cover her grandson’s tuition. She wants to explore whether it would be a good idea for her to open a marijuana dispensary in Monmouth.
The second meeting will be with Bill Sellsmore from Curaleaf, a marijuana business worth well over $500 million. Sellsmore is interested in getting the OLCC to guarantee the licensing of ten new retail outlets before they invest in Oregon anymore.
While the basic law is that dispensaries must be at least 1,000 feet from a school, there is the possibility for the RMLO to grant limited exceptions. These are based on agency discretionary judgement that the retail facility will not operate in a way that attracts attention from students.
Here are the questions you must answer. If possible, connect your answers to the scenario above.
1. How important are informal processes to public administration? What factors influence the outcomes of informal processes, such as the meetings you have scheduled?
2. What happens if you provide inaccurate advice during these meetings and Rigby or Sellsmore make a bad business decision as a result?
3) How do the courts generally review agency discretionary actions, as demonstrated by the federal court? What could the RMLO get wrong and have a licensing decision overturned in judicial review?
ESSAY ON SECTION 5: INFORMAL PROCESSES AND DISCRETION (Due 11:55 pm, May 13)
Essays should be 4-6 double-spaced pages. They should be written using only lectures and reading materials provided on Moodle. Identify the sources for specific f.
Identify in 150 - 200 words your reactions to the concepts of global.pdffathimafancyjeweller
Identify in 150 - 200 words your reactions to the concepts of globalization and Global Business
Ethics Issues.
Solution
Overview
The current financial crisis has raised questions about the legitimacy of capitalism. Ethical
failures certainly played a role. While it remains to be seen whether and how many people
blatantly broke the law, there are abundant signs of various forms of potentially unethical
behavior. These include greed, unreasonable amounts of leverage, subtle forms of corruption
(such as ratings agencies that appear to have had a conflict of interest), complex financial
instruments that no one really understood, and herd behavior where people just followed along
and failed to exercise independent judgment.
It is difficult or impossible to regulate against greed and against many of the other ethical
shortcomings that have been seen. What can be done is to force greater transparency and
accountability, a process which began with Sarbanes-Oxley and is expected to continue with new
regulations of the financial system.
Context
Drawing upon learnings from their work and experiences, the panelists and moderator exchanged
views with the audience on the ethics and legitimacy of business and capitalism in general, and
the financial crisis in particular.
Key Takeaways
The financial crisis may shift societal views on the legitimacy of business.
Each panelist offered a different perspective on the issue of ethics and legitimacy in business:
– The financial crisis has the potential to damage the legitimacy of capitalism (Di Tella). Richer
nations tend to be more right-wing in their views and have more capitalistic economic systems.
The United States is exceptionally right-leaning, even among developed nations.
These attributes are heavily influenced by beliefs regarding the reasons why people are
prosperous or poor. Americans tend to see prosperity as a product of effort more than luck; left-
leaning nations believe the opposite.
Affecting these beliefs: the number and severity of the shocks a society has weathered; and
perceptions regarding the legitimacy of business—i.e., the perceived degree of corruption.
America generally perceives that corrupt businesspeople are the exception, and punishes deviants
severely. However, this financial crisis holds the potential to shift America leftward since it: 1) is
a major shock that 2) suggests systemic corruption. Both call into some question the legitimacy
of U.S. capitalism.
– It is ethically legitimate for businesses to place the customer\'s interests above all else, because
only through profit comes the freedom to contribute to society (Vasella). Business leaders must
use their personal moral compasses to make ethical decisions. As for the business\'s compass, it
should be oriented toward satisfying customers above all stakeholders. That is the orientation
that allows for the greatest competitive success and profitability. In Mr. Vasella\'s view, only by
making a profit does a company earn the rig.
Help, My Business is In Trouble! (Series: Restructuring, Insolvency & Trouble...Financial Poise
When a business becomes financially troubled, the business owner often experiences denial, paralysis, or both. Lenders commonly lose confidence and then trust in the business, as communications tend to break down, deadlines are missed, and promises are broken. Small business owners commonly have issued personal guarantees, so business failure can often lead to personal financial stress. The good news is the business and business owner usually has some options, and even some leverage. This webinar explains what a business owner should- and should not- consider and do when dealing with financial trouble. Specific topics include discussion of bankruptcy (Chapters 7 and 11); assignments for the benefit of creditors; and friendly foreclosures. This webinar provides the business owner and her advisors with an overview of various restructuring and liquidation methods, a framework for how to decide between them, and practical tips for traversing the difficult environment that is financial distress.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/help-my-business-is-in-trouble-2021/
Compliance issues are at the front of every manager's and fiduciary’s mind these days. It used to be that all the worry came from a creative plaintiffs’ bar calling a business's conduct into question, but those days are long gone. Public and private companies are investigated by not only the United States federal government, but also local, state, and foreign governments. Self-regulating entities also add a layer of scrutiny. Under the insulation of the attorney-client privilege, an effective internal investigation can help marshal the facts to inform corporate decisions about past or existing violations and prevent potential future violations. An internal investigation can protect management from the violation and records the company's response to an incident or violation. However, most importantly, it serves to send a clear message that the company is serious about compliance and that it sets transparency as a priority. This webinar surveys recent compliance trends and discusses best practices regarding the attorney-client privilege, joint defense agreements, the use of experts, witness interviews, the consequences of self-disclosure and how to control the impact on the company.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/internal-investigations-101-2021/
Here is our ppt deck from the June 6th TMA presentation in Chicago. Thanks to my fellow panelists: Dave Gozdecki, Reid Schar and Jeff Vogelsang. Attendees received 1.5 hrs CE
Datascram is being called a massive “Datascam.” Engineers cut corners and, as it turns out, data is not deleted forever. Instead, once deleted, it resides on a Nigerian server where it is sold to the highest bidder. As the company prepares to shut its doors, new questions emerge about Damian Diamond’s role in the fiasco and whether he could be held personally responsible for the company’s potentially criminal activities.
BUSINESS LAW REVIEW- 2022: Defending White Collar Crime-101Financial Poise
While white collar crimes don’t usually carry the same stigma or penalties as violent crime, the consequences of a conviction, or even an allegation can be devastating. Leaving prison time aside, the business may also face investigation, prosecution and possibly, the risk of reputational damage, financial loss and unwanted exposure.
As governmental enforcement of laws against those accused of white collar crime increases, companies need to understand how to avoid unknowingly acting in ways that may be unlawful, how to prevent and detect potential employee misconduct, and how to react if misconduct does occur.
Part of the webinar series: Business Law Review 2022
See more at https://www.financialpoise.com/webinars/
Current Issues in Securities RegulationNow Dentons
Mark Evans, a partner in the FMC Toronto office, was invited to speak at the Second Annual Securities Symposium this month about current issues in the area of Securities Regulation.
How to Avoid Malpractice & Disciplinary Actions - General Do's and Don'ts (Se...Financial Poise
This webinar presents basic practice pointers to avoid malpractice and disciplinary actions, and how to respond to claims of malpractice or unethical behavior if they arise. The panel also discusses the role that malpractice insurance plays in these situations and the ramifications of a malpractice judgment or disciplinary action. Model Rules addressed may include: those that govern the client-lawyer relationship (Rules 1.1 through 1.10; 1.13; and 1.16); those that that speak to transactions with persons other than clients (Rules 4.1 through 4.4); those that govern the responsibilities of managing and supervisory lawyers, subordinate lawyers, non-lawyer assistance, independence, unauthorized practice of law, and multijurisdictional practice (Rules 5.1 through 5.5); and those that govern communication, including advertising and solicitation of clients (Rules 7.1 through 7.5).
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/how-to-avoid-malpractice-disciplinary-actions-general-dos-and-donts-2021/
Privacy Breaches - The Private Sector Perspectivecanadianlawyer
Discusses issues that arise in organizations when faced with a privacy breach. Compares attitude and approach of organizations with those of privacy regulators.
LEGAL ETHICS – BEST PRACTICES 2022 - How to Avoid Malpractice & Disciplinary ...Financial Poise
This webinar presents basic practice pointers to avoid malpractice and disciplinary actions, and how to respond to claims of malpractice or unethical behavior if they arise. The panel also discusses the role that malpractice insurance plays in these situations and the ramifications of a malpractice judgment or disciplinary action. Model Rules addressed may include: those that govern the client-lawyer relationship (Rules 1.1 through 1.10; 1.13; and 1.16); those that that speak to transactions with persons other than clients (Rules 4.1 through 4.4); those that govern the responsibilities of managing and supervisory lawyers, subordinate lawyers, non-lawyer assistance, independence, unauthorized practice of law, and multijurisdictional practice (Rules 5.1 through 5.5); and those that govern communication, including advertising and solicitation of clients (Rules 7.1 through 7.5).
Part of the webinar series: LEGAL ETHICS – BEST PRACTICES 2022
See more at https://www.financialpoise.com/webinars/
ESSAY ON SECTION 5 INFORMAL PROCESSES AND DISCRETION (Due 11.docxbridgelandying
ESSAY ON SECTION 5: INFORMAL PROCESSES AND DISCRETION (Due 11:55 pm, May 13)
Essays should be 4-6 double-spaced pages. They should be written using only lectures and reading materials provided on Moodle. Identify the sources for specific facts, concepts, and quotes by simple parenthetical references. Since you are only to use class materials, the instructor should easily be able to identify the source.
For the essays, you cannot “cut and paste”. Use the materials from class only and be sure to provide a simple reference, such as (Powerpoint) or (Library of Congress).
Answer all parts of the chosen question. Demonstrate that you have reviewed and understand any relevant information in that section’s materials.
When useful to the answer, incorporate details such as case names, author’s names, facts, and particularly specific terms or jargon important to that subject.
The essays should be thematic. Sentences should be complete.
Always address each part of the question. Always include specific details, terms, and cases that properly fit into the analysis.
SCENARIO: You work for the Oregon Liquor Control Commission(OLCC) in the Recreational Marijuana Licensing Office(RMLO). You have many applicants and the place is short-staffed since you loaned workers to the Unemployment Division.
You have two scheduled video meetings today. The first is with a Ms. Eleanor Rigby. Her e-mail says that she is an 80-year old grandmother who needs some extra income to cover her grandson’s tuition. She wants to explore whether it would be a good idea for her to open a marijuana dispensary in Monmouth.
The second meeting will be with Bill Sellsmore from Curaleaf, a marijuana business worth well over $500 million. Sellsmore is interested in getting the OLCC to guarantee the licensing of ten new retail outlets before they invest in Oregon anymore.
While the basic law is that dispensaries must be at least 1,000 feet from a school, there is the possibility for the RMLO to grant limited exceptions. These are based on agency discretionary judgement that the retail facility will not operate in a way that attracts attention from students.
Here are the questions you must answer. If possible, connect your answers to the scenario above.
1. How important are informal processes to public administration? What factors influence the outcomes of informal processes, such as the meetings you have scheduled?
2. What happens if you provide inaccurate advice during these meetings and Rigby or Sellsmore make a bad business decision as a result?
3) How do the courts generally review agency discretionary actions, as demonstrated by the federal court? What could the RMLO get wrong and have a licensing decision overturned in judicial review?
ESSAY ON SECTION 5: INFORMAL PROCESSES AND DISCRETION (Due 11:55 pm, May 13)
Essays should be 4-6 double-spaced pages. They should be written using only lectures and reading materials provided on Moodle. Identify the sources for specific f ...
ESSAY ON SECTION 5 INFORMAL PROCESSES AND DISCRETION (Due 11.docxdebishakespeare
ESSAY ON SECTION 5: INFORMAL PROCESSES AND DISCRETION (Due 11:55 pm, May 13)
Essays should be 4-6 double-spaced pages. They should be written using only lectures and reading materials provided on Moodle. Identify the sources for specific facts, concepts, and quotes by simple parenthetical references. Since you are only to use class materials, the instructor should easily be able to identify the source.
For the essays, you cannot “cut and paste”. Use the materials from class only and be sure to provide a simple reference, such as (Powerpoint) or (Library of Congress).
Answer all parts of the chosen question. Demonstrate that you have reviewed and understand any relevant information in that section’s materials.
When useful to the answer, incorporate details such as case names, author’s names, facts, and particularly specific terms or jargon important to that subject.
The essays should be thematic. Sentences should be complete.
Always address each part of the question. Always include specific details, terms, and cases that properly fit into the analysis.
SCENARIO: You work for the Oregon Liquor Control Commission(OLCC) in the Recreational Marijuana Licensing Office(RMLO). You have many applicants and the place is short-staffed since you loaned workers to the Unemployment Division.
You have two scheduled video meetings today. The first is with a Ms. Eleanor Rigby. Her e-mail says that she is an 80-year old grandmother who needs some extra income to cover her grandson’s tuition. She wants to explore whether it would be a good idea for her to open a marijuana dispensary in Monmouth.
The second meeting will be with Bill Sellsmore from Curaleaf, a marijuana business worth well over $500 million. Sellsmore is interested in getting the OLCC to guarantee the licensing of ten new retail outlets before they invest in Oregon anymore.
While the basic law is that dispensaries must be at least 1,000 feet from a school, there is the possibility for the RMLO to grant limited exceptions. These are based on agency discretionary judgement that the retail facility will not operate in a way that attracts attention from students.
Here are the questions you must answer. If possible, connect your answers to the scenario above.
1. How important are informal processes to public administration? What factors influence the outcomes of informal processes, such as the meetings you have scheduled?
2. What happens if you provide inaccurate advice during these meetings and Rigby or Sellsmore make a bad business decision as a result?
3) How do the courts generally review agency discretionary actions, as demonstrated by the federal court? What could the RMLO get wrong and have a licensing decision overturned in judicial review?
ESSAY ON SECTION 5: INFORMAL PROCESSES AND DISCRETION (Due 11:55 pm, May 13)
Essays should be 4-6 double-spaced pages. They should be written using only lectures and reading materials provided on Moodle. Identify the sources for specific f.
Identify in 150 - 200 words your reactions to the concepts of global.pdffathimafancyjeweller
Identify in 150 - 200 words your reactions to the concepts of globalization and Global Business
Ethics Issues.
Solution
Overview
The current financial crisis has raised questions about the legitimacy of capitalism. Ethical
failures certainly played a role. While it remains to be seen whether and how many people
blatantly broke the law, there are abundant signs of various forms of potentially unethical
behavior. These include greed, unreasonable amounts of leverage, subtle forms of corruption
(such as ratings agencies that appear to have had a conflict of interest), complex financial
instruments that no one really understood, and herd behavior where people just followed along
and failed to exercise independent judgment.
It is difficult or impossible to regulate against greed and against many of the other ethical
shortcomings that have been seen. What can be done is to force greater transparency and
accountability, a process which began with Sarbanes-Oxley and is expected to continue with new
regulations of the financial system.
Context
Drawing upon learnings from their work and experiences, the panelists and moderator exchanged
views with the audience on the ethics and legitimacy of business and capitalism in general, and
the financial crisis in particular.
Key Takeaways
The financial crisis may shift societal views on the legitimacy of business.
Each panelist offered a different perspective on the issue of ethics and legitimacy in business:
– The financial crisis has the potential to damage the legitimacy of capitalism (Di Tella). Richer
nations tend to be more right-wing in their views and have more capitalistic economic systems.
The United States is exceptionally right-leaning, even among developed nations.
These attributes are heavily influenced by beliefs regarding the reasons why people are
prosperous or poor. Americans tend to see prosperity as a product of effort more than luck; left-
leaning nations believe the opposite.
Affecting these beliefs: the number and severity of the shocks a society has weathered; and
perceptions regarding the legitimacy of business—i.e., the perceived degree of corruption.
America generally perceives that corrupt businesspeople are the exception, and punishes deviants
severely. However, this financial crisis holds the potential to shift America leftward since it: 1) is
a major shock that 2) suggests systemic corruption. Both call into some question the legitimacy
of U.S. capitalism.
– It is ethically legitimate for businesses to place the customer\'s interests above all else, because
only through profit comes the freedom to contribute to society (Vasella). Business leaders must
use their personal moral compasses to make ethical decisions. As for the business\'s compass, it
should be oriented toward satisfying customers above all stakeholders. That is the orientation
that allows for the greatest competitive success and profitability. In Mr. Vasella\'s view, only by
making a profit does a company earn the rig.
Help, My Business is In Trouble! (Series: Restructuring, Insolvency & Trouble...Financial Poise
When a business becomes financially troubled, the business owner often experiences denial, paralysis, or both. Lenders commonly lose confidence and then trust in the business, as communications tend to break down, deadlines are missed, and promises are broken. Small business owners commonly have issued personal guarantees, so business failure can often lead to personal financial stress. The good news is the business and business owner usually has some options, and even some leverage. This webinar explains what a business owner should- and should not- consider and do when dealing with financial trouble. Specific topics include discussion of bankruptcy (Chapters 7 and 11); assignments for the benefit of creditors; and friendly foreclosures. This webinar provides the business owner and her advisors with an overview of various restructuring and liquidation methods, a framework for how to decide between them, and practical tips for traversing the difficult environment that is financial distress.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/help-my-business-is-in-trouble-2021/
Compliance issues are at the front of every manager's and fiduciary’s mind these days. It used to be that all the worry came from a creative plaintiffs’ bar calling a business's conduct into question, but those days are long gone. Public and private companies are investigated by not only the United States federal government, but also local, state, and foreign governments. Self-regulating entities also add a layer of scrutiny. Under the insulation of the attorney-client privilege, an effective internal investigation can help marshal the facts to inform corporate decisions about past or existing violations and prevent potential future violations. An internal investigation can protect management from the violation and records the company's response to an incident or violation. However, most importantly, it serves to send a clear message that the company is serious about compliance and that it sets transparency as a priority. This webinar surveys recent compliance trends and discusses best practices regarding the attorney-client privilege, joint defense agreements, the use of experts, witness interviews, the consequences of self-disclosure and how to control the impact on the company.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/internal-investigations-101-2021/
Here is our ppt deck from the June 6th TMA presentation in Chicago. Thanks to my fellow panelists: Dave Gozdecki, Reid Schar and Jeff Vogelsang. Attendees received 1.5 hrs CE
Chapter Introduction
Ditty_about_summer/ Shutterstock.com
Learning Objectives
The five Learning Objectives below are designed to help improve your understanding. After reading this chapter, you should be able to answer the following questions:
1. What are two different views of the role of business in society?
2. How do duty-based ethical standards differ from outcome-based ethical standards?
3. What is short-term profit maximization, and why does it lead to ethical problems?
4. What are the four steps in the IDDR approach to ethical decision making?
5. What ethical issues might arise in the context of global business transactions?
“New occasions teach new duties.”
James Russell Lowell 1819–1891 (American editor, poet, and diplomat)
One of the most complex issues that businesspersons and corporations face is ethics. Ethics is not as clearly defined as the law, and yet it can substantially impact a firm’s finances and reputation, especially when the firm is involved in a well-publicized scandal. Some scandals arise from conduct that is legal but ethically questionable. At other times, the conduct is both illegal and unethical. Business law and legal environment students must be able to think critically about both legal and ethical issues. As noted in the chapter-opening quotation, “New occasions teach new duties.”
Suppose that Finn Clayborn dropped out of Harvard University to start a company in Silicon Valley that developed and sold finger-prick blood-test kits. Clayborn raised millions from investors by claiming that his new technology would revolutionize blood testing by providing a full range of laboratory tests from a few drops of blood. The kits were marketed as a better alternative to traditional, more expensive lab tests ordered by physicians. They were sold at drugstores for a few dollars each and touted as a way for consumers to test their blood type and monitor their cholesterol, iron, and many other conditions. Within six years, Clayborn and his company were making millions. But complaints started rolling in that the test kits didn’t work and the results were not accurate (because more blood was needed). Numerous consumers, drugstores, and government agencies sued the company for fraudulent and misleading marketing practices. Clayborn’s profitable start-up now faces an uncertain future.
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2. The downfall of John Gellene
Milton C. Regan, Jr., Eat What You Kill: The Fall of a Wall Street Lawyer
(University of Michigan Press, 2006).
• Established partner and experienced bankruptcy practitioner at Wall St law firm, Millbank Tweed
• Failed to disclose under oath a potential conflict of interest to the bankruptcy court, contrary to court
rules. He was subsequently jailed for knowingly and fraudulently making a false declaration, and for
perjury.
“Our review of the record verifies that the government established Mr. Gellene's
knowledge of his duty to disclose. It set forth Mr. Gellene's expertise in bankruptcy and
the bankruptcy court's statements alerting him to the importance of full disclosures. Mr.
Gellene was fully apprised of the importance of the information that had been
excluded. He had been questioned by his law partner, Toni Lichstein, several times about
whether there might be a conflict of interest and whether all necessary disclosures had
been made. Yet Mr. Gellene continued to withhold the information over a two-year
period; he simultaneously worked on the Bucyrus bankruptcy and represented South
Street, Greycliff and Salovaara without informing his client Bucyrus of the other
representations.” - United States v Gellene (1999) USCA 7th Cir., No 98-2985
3. John Gellene:
unethical indicators?
• Poor ‘hygiene’/ethical fading
• Evidence of previous failure to disclose in a bankruptcy case;
• Practised without a New York law license for nine years, and
misrepresented the fact;
• Routinely failed to file timely timesheets at the firm (to which firm
turned a blind eye/imposed limited sanctions);
• Some evidence of limited willingness to engage in self-reflection +
sense of entitlement(?) ‘rules don’t apply to me’;
• Undesirable(?) working practices
• Tendency to operate as a lone wolf: did not delegate, did not keep
others appraised of his workload;
• Problem of unrelenting standards – described as an “insanely hard
worker” (NB even by corporate law firm standards!), and self-
confessed perfectionist;
• Failed to pay attention to colleagues – eg concerns re potential
conflicts, or to take opportunities to correct the Rule 2014
disclosure at any point in the subsequent proceedings
4. John Gellene:
Environmental effects
• Question marks over management of JG – inattention to or even turning a blind eye to warning signs –
BUT also, more generally:
• Pressure from inter- and intra-firm competition and the ‘tournament’ of merit-based compensation -
especially in larger firms – encourages sense of being only one bad deal away from failure;
• Problems of scale – harder for firms to monitor ethical compliance; increased risk of what Zygmunt
Bauman (1992) describes as ‘responsibility floating between the players’
• ‘Open texture’, localisation and even fungibility of ethical norms – formal rules provide limited
(conscious) constraint in practice; formal rules may be supplemented or supplanted by deviant local
interpretations/norms;
• ‘Client-centred’ or ‘client first’ ideologies and work practices that narrow ethical focus
4
5. John Gellene:
Risk and the routine
5
“Attorneys rarely have to make statements under penalty of perjury. Since Rule 2014 is one of the few
cases, it should be treated seriously. However, there is a significant temptation not to. The Rule 2014
disclosure is filed toward the beginning of the case. As a result, there is a temptation to get it on file
quickly and to copy the disclosure from the previous case with a few modifications. This would be a
mistake. As I have read 2014 again recently, I was surprised to learn not only that it required
disclosure of connections rather than conflicts, but that it required disclosure of connections to other
attorneys and accountants in the case. Sometimes it is easy to get so familiar with something that you
lose respect for it.”
- Steve Sather, A Texas Bankruptcy Lawyer’s Blog, July 16, 2006,
- http://stevesathersbankruptcynews.blogspot.com/2006/07/sad-case-of-john-gellene-or-what-
it.html
6. The complexity of professional decision-making
From: J. Webb, ‘Regulating the Practise of Practice: On Agency and Entropy in Legal Ethics’, in J. Murray, T. Webb &
S. Wheatley (eds), Complexity Theory & Law: Mapping a New Legal Science, Abingdon UK: Routledge, 2018)
7. Complex – not (just) complicated
• Complex systems are open to their environment –
difficult to frame boundaries
• Complexity itself is an emergent quality of the
system (‘more than the sum of its parts’)
• Complex systems are dynamic, not static – order is
“an effect generated by heterogeneous means”;
entropy (disorder, uncertainty) is built-in
• Components (agents) respond locally without
knowledge of the full effects of their actions on the
system
• Interactions are ‘non-linear’ – causality is often
unpredictable and effects may be amplified in
unexpected ways
7
8. Five characteristics of ‘Drift’
Sidney Dekker, Drift into Failure: From hunting broken components to
understanding complex systems, (CRC Press, 2012)
• Competition and resource scarcity – effects of competitive business environment on investment in (eg)
safety systems; workload and workload boundaries
• Small steps – drift is commonly incremental “continuous organisational and operational adaptation
around goal conflicts and uncertainty produces small step-wise normalisations of what was previously
judged as deviant” (2012: 15)
• Sensitive dependence on initial system conditions – ie, initial conditions have long-term consequences –
consider effects of how things are classified by regulation; ability/willingness of regulators to anticipate
the (adaptive) future
• Unruly technology – (using technology in its broad sense) as complexity theory predicts, operational
systems do not operate as designed once ‘in the wild’
• Contributions of the ‘protective structure’ – the extent to which the regulatory and supervisory parts of
the system can be/become part of the problem
8
9. Potential for drift in legal practice
• Pressure to be (even more) client-centred – corrosive of legal values?
• Under-investment(?) in firm-level oversight and ‘ethical infrastructure’
Scarcity & competition
• Institutional – eg culture of rounding hours or double-charging; limited encouragement to reflect/de-
brief on transactions (permitting poor practice/not institutionalising good practice)
• Individual – incremental corner-cutting;
Small steps
• Individual and one-size-fits-all orientation of regulation
• Creation of perverse incentives – eg normalisation of hourly billing
• Limited ‘moral leadership’
Initial conditions
• Lack of systematisation – especially in smaller firms
• Routinisation and commodification of services may build-in risk to systems
Unruly technology
• Regulatory ‘capture’ + fungibility of rules – eg incremental relaxation of conflict of interest rules
• Wait and see/reactive approach to innovation (eg legal technology)
Protective structure
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10. “Complexity theory has no answers as to who is
accountable for drift into failure. Just as the Newtonian
view only has oversimplified, extremely limited, and
probably unjust answers. What complexity theory allows us
to do, however, is dispense with the idea that there are easy
answers, supposedly within the reach of the one with the
best method or most objective viewpoint. Complexity
allows us to invite more voices into the conversation, and to
celebrate the diversity of their contributions. Truth, if there
is such a concept, lies in diversity, not singularity.”
(Dekker, 2012: 202)
The solution(s)?
10
11. Thank you
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11
Editor's Notes
John G. Gellene, a partner at the law firm of Milbank Tweed Hadley & McCloy (“Milbank”) in New York, represented the Bucyrus-Erie Company (“Bucyrus”) in its Chapter 11 bankruptcy. Mr. Gellene filed in the bankruptcy court a sworn declaration that was to include all of his firm's connections to the debtor, creditors, and any other parties in interest. The declaration failed to list the senior secured creditor and related parties. Mr. Gellene was charged with two counts of knowingly and fraudulently making a false material declaration in the Bucyrus bankruptcy case, in violation of 18 U.S.C. § 152, and one count of using a document while under oath, knowing that it contained a false material declaration, in violation of 18 U.S.C. § 1623. Although Mr. Gellene admitted that he had used bad judgment in concluding that the representations did not need to be disclosed, he asserted that he had no fraudulent intent. After a six-day trial, on March 3, 1998, the jury returned guilty verdicts against Mr. Gellene on all three counts. Mr. Gellene was sentenced to 15 months of imprisonment on each count, to run concurrently, and was fined $15,000. Millbank Tweed, moreover, was required to disgorge around $2 million in fees, and found itself embroiled in $100 million dollar malpractice suit
Conventionally there is a tendency to frame stories like this in one of two ways – first the ‘bad apple’ version that this is a problem with an outlier, a “bad person”. There may be some element of truth in that, but is it a concern that some of the warning signs were not picked-up or acted upon; that Gellene was allowed to be what even his firm regarded as a bit of a maverick
The other thesis often offered is that Gellene was the victim of a corporate culture that that makes ethical failure more likely – not so much a bad apple as a bad barrel
But then there is also a third element, a sense that Gellene just got unlucky – that a conjunction of circumstances escalated a routine failure that would normally have merited no more than a heavy slap on the wrist from the court into something career-ending. And there is more than a grain of truth to that too – we know from our own experience how hard it can be, especially when under pressure, to stop and think, to pause the routine, and to spot the (often) small difference that potentially makes a big difference to how things are going to go.
Now my point is, of course, that there is more than an element of truth in all of these accounts, and yet none of them by itself gets to the nub of what went wrong in this case. And this I think is fundamental (in management and regulatory terms) because it points to the real problem: the extent to which the potential for significant failure is probably inevitable, indeed, built in to any system, and the extent to which each specific failure is unique and unpredictable (except with the benefit of hindsight!). In short, I suggest we need to recognise failure as an emergent quality of the very systems and networks of relationship that have made professions and PSFs such a success story over the last 100+ years. To see why I invite us to take a step into the wonderful world of complexity theory.
Complex interaction between each (individual/team level) legal process, the organisational context and culture and the wider environment within which the firm is located
Two critical points – single elements of a complex system do not ‘contain’ and cannot ‘understand’ the whole complexity of the system. In human terms we act and respond on the information available under conditions of bounded rationality and (as organisational theory is increasingly recognising) bounded ethicality. As Chuch, Bazerman & Banarji observe:
In the bounded ethicality model, the self processes work, unconsciously, to protect a particular view and this view bounds ethical decision making. Ethical decisions are biased by a stubborn view of oneself as moral, competent, and deserving, and thus, not susceptible to [breaches of ethical conduct]
Attempts at regulation change system conditions, the effects, under conditions of complexity, are contingent and uncertain
Aside from those situations where agents act out of deliberate male fides or deception, decisions will generally make or at least seem to make good sense at the time. In organisational contexts many of these decisions will become part of the culture and fabric – the ‘way we do things in this firm’ But, because decision-makers are local, not global, and because they are constrained by limited knowledge and bounded rationality/ethicality, the potentially hasrmful consequences of such decisions and ways of working may be unobserved, and indeed, unobservable, and by virtue of amplification effects what may constitute small localised risks can become larger even systemic risks over time. This reflects a process that Sidney Delkker describes as the ‘drift into failure’. Drift according to Dekker commonly displays five characteristics
There are clear ways in which the model, I think, can be applicable and descriptively useful for understanding the risks in other areas of professional work, like law. Tentative and deliberately rather provocative analysis!
Some explanation of my first point: the philosopher Michael Sandel makes the point that there are some things that money should not be able to buy and the law should not support, because the broader system and those who use it are degraded or corrupted thereby?
The legal profession’s enthusiastic use of NDAs, and rather belated (and enforced) reflection thereon would seem to be a case in point. As Richard Moorhead has asked: Is a legal system that supports the buying and selling of silence over allegations of iniquity a system that degrades itself and those who use it? [Privacy of the situation does not require anyone to distinguish those cases where individual reputation may be damaged by unjust allegations, from those cases where a malicious well-resourced abuser uses their power to buy-off legitimate complaints.]
What are the solutions? Well I’m afraid the first lesson of complexity is that there are no magic bullets that will allow us to sail off into the sunset rather than sink to the ocean’s floor.
Complexity does tell us there is important groundwork to be done, not least in acknowledging the very bounded and situated nature of ethical decision-making, and the difficulties this gives us all in terms of developing useful workable norms, and consistent standards of practice. Moreover, as Dekker argues, we need to think more widely and openly about how we construct (which includes where we look for) narratives of failure and blame. Scapegoating, and narrowly constructed notions of cause and effect may satisfy a short term desire for a ‘solution’, but may not do much to build the robustness of the system in the longer term. The five characteristics in an of themselves offer a starting point for that broader understanding.
But there is a larger, critical, issue I suggest: we need to be able to have better conversations about failure. Where safety critical systems on oil rigs and aeroplanes fail, there are formal, relatively public, systems of review in place. These may be far from ideal, but are also better than nothing. For professions like law, failure most often remains a dirty little secret. The first instinct is of course to cover-up; the second is to limit the damage, and particularly any public talk about the damage – a good outcome is a confidential payoff and a client quietly taking their work elsewhere; maybe a lawyer loses their job, or like John Gellene, their career. There is often limited room to learn about failure in such an environment, and not always a willingness to hear counter-narratives or external contributions. Whilst understandable this is the first problem to overcome.