Results of the analysis of the case showed that AT&T cell phone company acted unethically regarding its consumers Concepcions. AT&T engaged in false advertising and fraud. Moreover, cell phone company designed contract in such a way that a provision deprived second party(Concepcions in this case) of the benefits of the agreement. From the legal standpoint, however, AT&T actions partly can be considered legal. Partly because the company is still liable for fraudulent misrepresentation.
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 was an act passed by Congress in 2002 in order to protect investors. It was made and passed in response to scandals, such as the Enron and Tyco scandals because such scandals lowered the confidence of the investors and hurt businesses. One example of a fraud is WorldCom's line costs. They were very different from their competitors' line costs, and that alerted people to the possibility of a fraud (Accounting, 2009, p. 699). The Sarbanes-Oxley Act basically forces companies to disclose any information about any type of organizational risks (Abrams & Yellin, 2003).
CASE 1.4 HEALTH MANAGEMENT, INC. Synopsis This case profiles an imaginative accounting fraud orchestrated by two top executives of Health Management, Inc. (HMI), a New York-based pharmaceuticals distributor. The HMI fraud is noteworthy because it led to the first major test of an important federal statute, the Private Securities Litigation Reform Act of 1995 (PSLRA), that was intended to alleviate the growing burden of class-action lawsuits filed against accounting firms and other third parties under the Securities Exchange Act of 1934. (The PSLRA amended key provisions of the 1934 Act.) The PSLRA makes it more difficult for plaintiffs to successfully “plead” a case under the 1934 Act, that is, to have such a lawsuit proceed to trial. Among other provisions in the PSLRA is a proportionate liability rule.
It also mentions, in 1977, the United States passed the Foreign Corrupt Practices Act (FCPA) in an attempt to fight bribe payments by U.S. companies and has since been extended to foreign companies in commission within the U.S. borders. Bribery has been acceptable for companies to expand globally regardless of the means. While bribery is essentially illegal in the U.S. and numerous other countries, it has become a part of several
In 2005 the founder of Pennsylvania based Le-Nature’s, Greg Podlucky, and four other officers were accused of falsifing financial data to overstate company revenue. Phony invoices, customer checks and account statements were used to create nonexistent
In 2003, the U.S. government sued Northrop Grumman for overcharging them in regards to space projects. In the year 2000, the GAO (General Accounting Office) concluded that Northrop Grumman was joined the list of military contractors that guilty of fraud and abuse. The charges include procurement fraud, defective pricing, cost/labor mischarging, substitution/ nonconforming product, undelivered product and others. Northrop Grumman reportedly paid $4,000,000 to the government to settle this incident. It’s scary that although Northrop Grumman has been implicated in numerous scandals continues to have a military contract.
Discuss the role that AIG’s corporate culture played in its downfall. 2. Discuss the ethical conduct of AIG executives and how a stronger ethics program might help the company to strengthen the ethics of its corporate culture. 3. What could AIG have done differently to prevent its failure and subsequent bailout?1.
What is the controversy surrounding Flex Industries? Discuss the chain of events. The controversy surrounding Flex industries is that the company has paid a bribe to government officials for evading the payment of excise duties. Entrepreneur industrialist Ashok Chaturvedi, the owner of Flex group of companies and the chief excise commissioner Someshwar Mishra were arrested by the Central Bureau of Investigation after it recovered $12,500 from Mishra's office and $12,500 from his car in November 2001. In May 2004, the court exonerated both Chaturvedi and Mishra because of lack of evidence.
Such circumstances where a director is to face personal liability is misusing company information. Rene Rivkin was the director and chairman of his own company and was sentenced to nine months of weekend detention and fined $30,000 after being found guilty of insider
There are six areas in particular where ethical issues have risen in organizations: compensation; conflicts of interest; publications and solicitation; financial integrity; investment policies; and accountability and strategic management (Rhode & Packet, 2009). Some examples of outrageous unethical behavior by corporations that compare to PharmaCare’s actions are: • Merrill Lynch & Co. CEO John Thain, spent $1.22 million in 2008 to redecorate his office, including the purchase of a $1,400 trash can and a $35,000 antique commode while the company was hemorrhaging losses of some $27 billion (Fitzgerald, 2009). • Former United Way CEO, William Aramony served six years in prison after an investigation uncovered misuse of the charity’s funds to finance a lavish lifestyle, including luxury condominiums, personal trips, and payments to his mister (Arenson, 1995). • Enron is known for their unethical practices. Enron’s mismanaged bonus systems and compensation structure was a part of the explanation for their morally irresponsible behavior reflected in Enron Corp. and in financial crisis by skirting of legal technicalities and ethical boundaries, Enron manage to lose more than $600 million (Sims & Brinkmann,