There were also unethical issues involving the entity that was supposed to secure and watch over those that are investing our money. That entity, known as the Securities and Exchange Commission, failed to properly investigate certain claims that were made against Madoff long before this scheme broke wide open. The SEC was warned numerous times about the inconsistent information from Bernie Madoff. Ethical misconduct within this case has made more investors aware of what is needed besides forking over large sums of money and charitable contributions to someone who claims they are doing the work of the people. Investors now know that it is also their job to challenge and be more “in tune” to what their money is doing and how their money is working.
As people as a whole have proven time and time again, there are rules and laws and there are people whom break those rules and laws for personal gain. As long as people choose to be dishonest and unethical in their businesses and personal choices when it comes to finances, there will be financial fraud and investors will suffer financial
1. Miller fits the profile of the average fraud perpetrator in that he gained the trust of his employer, he wasn’t violent, he worked where he committed the fraud and he spent the money he stole to have a better lifestyle. He would not have been able to continue the lifestyle he had without the money he was stealing. He was also stealing from new employers to pay back the prior employers. He differed from the average fraud perpetrator in that he admitted what he had done and promised to pay back the money he had stolen.
Directly causing a proven loss. Uncovering a theft loss, exposing and stopping it can be challenging, but even more challenging may be recovering the loss against third parties for example the insurance company. The likelihood of recovery is considerably determined by the steps taken following the discovery. In dealing successfully with any employee theft, there are several basic steps: Conduct an immediate and accurate investigation. File a timely proof of loss with the insurance carrier.
When corruption occurs it damages the reputation of the employees and the business. Society relied upon this firm to assist in making them money but the firm was more concerned with their bottom line. Many of the individuals doing business with these firms lost their life savings and destroyed some of the trust that investors have with the Wall Street firms. It makes people have second thoughts about investing in the stock market. Another effect this unethical behavior had on these organizations been they agreed to pay a penalty of over $1.43 billion dollars as compensation to the victims.
JDR- Business Technique. Much as one might like to see John D. Rockefeller as the arch capitalist crushing competitors as he gained monopolistic power, it's not so (at least according to the biography I read). He did indeed control much of the oil in the United States but he was fair in the prices he offered competitors he wanted to buy out and he was modest in his personal expenses and generous in his charitable contributions all his life. How he gain control He was able to price his product so low that competitors couldn't compete. They would then go out of business and/or sell to JDR.
It uses Public money unnecessarily and is unfair to taxpayers. It makes financial reform going forward much more difficult. Protecting the markets for derivative products like CDOs and CDSs allows for a repeat of the risky practices that got us into the current crisis. And finally, by guaranteeing the corporate existence of large banks, we are maintaining their power and priorities and thus are not likely to see gains on predatory lending, foreclosure abuse, and other areas where reform is sorely needed. If we want to help the people who are suffering in this crisis and recession, then we should make financial policies with them directly in mind.
1) Are information gathering techniques like rajaratnam’s common on Wall Street? If so, what could regulators, investors, and executives do to reduce the practice? Yes, I think information gathering techniques like rajaratnam so are Connie. In Wall Street. Although insider trading is illegal people will continue to do it as they see money as more important than what it right and wrong.
Provide examples to support your response. The CFO for a corporation deliberately misstates expenses on the income statement purely out of a sense of loyalty to his CEO and the company. The CFO will receive no financial incentive for this misstatement. In fact, he risks losing his job by doing this. Is this an ethical violation for the CFO?
They can easily use fraud to authorize payment for a false invoice. The accountant also should not be able to print checks and complete the bank reconciliation. It allows the accountant to perpetrate fraud because they have access to blank checks to write fake checks and then cover it up with their record keeping responsibility. Along with segregation of duties, this also violates independent internal verification. A different employee, separate from personnel responsibility for the information, should make the verification and should report any discrepancies to management.