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1. The document discusses the 2008 bankruptcy of Lehman Brothers, the largest in US history. It analyzes whether corruption or bribery were involved, and whether the company was socially responsible.
2. Over 5,500 UK investors lost $200 million from Lehman Brothers' products. While some were compensated, many are still waiting and the CEO faced no legal consequences.
3. The document examines whether capitalism justly allocates resources and the role of government regulation in markets. It discusses legal ramifications for companies engaging in wrongdoing under the Sarbanes-Oxley Act.
1. The document discusses the 2008 bankruptcy of Lehman Brothers, the largest in US history. It analyzes whether corruption or bribery were involved, and whether the company was socially responsible.
2. Over 5,500 UK investors lost $200 million from Lehman Brothers' products. While some were compensated, many are still waiting and the CEO faced no legal consequences.
3. The document examines whether capitalism justly allocates resources and the role of government regulation in markets. It discusses legal ramifications for companies engaging in wrongdoing under the Sarbanes-Oxley Act.
1. The document discusses the 2008 bankruptcy of Lehman Brothers, the largest in US history. It analyzes whether corruption or bribery were involved, and whether the company was socially responsible.
2. Over 5,500 UK investors lost $200 million from Lehman Brothers' products. While some were compensated, many are still waiting and the CEO faced no legal consequences.
3. The document examines whether capitalism justly allocates resources and the role of government regulation in markets. It discusses legal ramifications for companies engaging in wrongdoing under the Sarbanes-Oxley Act.
Ethics Case Analysis Yifan Guo Keiser University Dr. Eggertsson MAN551GH3 07/13/2014 2 Running head: ETHICS CASE ANALYSIS Was the accusation bribe or corruption involved? Lehman Brother owned about $ 450 million owned by the bank and had not enough money to pay off the debits which led the largest bankruptcy in US history on 15 September 2008, and this bankruptcy also indicated the corruption among multiple layers of the corruption and theft, such as violate not to borrow short term to lend the long term in order to make profits, willfully misstate the statements about their activities, financial environment, and other activities related to their customers to the public (Wolff, 2011). The CEO of Lehman Brother also made the statement about his compensation of $310 million but record was $485 million and he insisted most of his compensation belongs to the worthless stock of Lehman Brother (Hallman, 2012). Well, the more you get, the more you will pay for tax, and the CEO must know how much he really made and how many victims had been involved in this financial fraud, these problems have come up in my head again. Was the company liable, socially responsible and accountable? There are more than 5,500 UK investors have lost about 200 million euro on the Lehman Brothers products, although some investors just get their back because of finding evidence of misleading brochures, there are still many other investors keep waiting for their compensation but initially it appeared there was nothing those investors can do (Millers, 2013). Lehman Brothers have a lot of branches all over the world, and this news is only one of thousands news about the victims. Although some employees have been jailed, the CEO of Lehman Brothers Dick Fuld is still outside of the jail and he also has his own company (Green, 2013). A man who was the CEO of Lehman Brothers has never been jailed since the Lehman Brothers collapsed, 3 Running head: ETHICS CASE ANALYSIS and it is really ridiculous why this guy hurt so many investors but he is not in jail, where is the accountability for the management of the Lehman Brothers. Is capitalism a just system for allocating resources? The capitalism emphasizes the role of the free enterprises in the markets which contains free competition among free enterprises for allocating resources in a relative free and fair society, it also emphases the political freedom due to the nature of the capitalism and create self- organizations that people can trade based on their own wills (Elliott, 1980). According to what Elliot said, the capitalism is not only the system to allocate resources but also emphases the freedom and enhances the ideology. Though most developed countries take the capitalism, imbalance of resources allocation is obvious. Americans think only 20% Americans control almost 50% of the total wealth, and 92% Americans ideal distribution is that each class of people should share the total wealth at a fair level, but the reality is 20% wealthy people control 75% of the total wealth, at the same time, only 1% Americans control 24% wealth, and the bottom families and another 20% people have barely have 5% of the total wealth (Pan, 2013). What role should the government play in regulating the marketplace? Brodwin believes that the government should be responsible for protecting individuals property, assets; stabilize currency, national security, use the funds or capital that collected from citizens on efficient infrastructure, such as roads, public transportation, and airports (2012). What has been some of the legal ramifications to companies caught in bad behavior? The Sarbanes-Oxley Act is a special act to specify several rules for corporation management, accounting ethic regulation, and securities market regulation: if people who 4 Running head: ETHICS CASE ANALYSIS influence the US agency investigation, they may be imprisoned not more than 20 years; CEO/CFO who made wrong financial statement certification may be fined not more than $ 1,000,000or imprisoned not more than 10 years, or both; people who against whistleblowers will be imprisoned not more than 10years or be fined, or both (Singer & You, 2011). To what extent can the company of your choice improve its corporate branding for global perspective? After Lehman Brothers bankrupted, the assets of the Lehman Brothers still contain $30 billion cash and $35 billon no cash assets. These assets will be spread to creditors while the stockholders will not get anything back (Gruyaert & Van loock, 2014). When people talk about the Lehman Brothers, the only thing they come up with is only bankruptcy, fraud, and hate. The only thing for Lehman Brothers is to pay off to the creditors. How can we use the Sarbanes-Oxley Act of 2002 monitor compliance in working with US based international companies? Discuss the effects on US business and reforms for corporate America. The Sarbanes-Oxley Act emphasizes the regulation on the corporation management, accounting activities, and stock markets. For first 6 chapters, it requires a new dependent board to supervise companies that going public and companies public companies, enhance the financial statement, limit the behaviors of managers and fix the management structure of the company in order to enhance the responsibility of the report; the chapter 8 to chapter 11 enhance the penalties of peoples violation, increase the level of the senior executives responsibility of financial reports , and specify penalties for different kinds of violations.; on the other hand, the accounting principles has been fully modified and enhance the internal management of public 5 Running head: ETHICS CASE ANALYSIS companies (Singer & You, 2011). Generally, business and management most like are regulated and customers benefits will be well protected because the requirements, regulations, and penalties are enhanced. Due to the change of these regulations, the operation cost and audit cost are obviously increased and most mid-size and small companies may suffer because of high audit cost. 6 Running head: ETHICS CASE ANALYSIS Reference Brodwin, D. (2012). Why we need the government in the marketplace. Retrieved from http://www.usnews.com /economic-intelligence/2012/12/21/why-we-need-the- government-in-the-marketplace Elliott, J. E. (1980). Social and Institutional Dimensions of the Theory of Capitalism in Classical Political Economy. Journal Of Economic Issues (Association For Evolutionary Economics), 14(2), 473. Green, J. (2013). Where is Dick Fud now? Finding Lehman Brothers last CEO. Retrieved from http://www.businessweek.com/articles/2013-09-12/where-is-dick-fuld-now-finding- lehman-brothers-last-ceo Gruyaert, D., & Van Loock, S. (2014). UK Supreme Court Decision on Lehman Brothers Client Money: Equity or Lottery? European Review Of Private Law, 22(2), 217-249. Hallman, B. (2012). Four years since Lehman Brothers, Too big to fail banks, now even bigger, fight reform. Retrieved from http://www.huffingtonpost.com/2012/09/15/lehman- brothers-collapse_n_1885489.html Millers, V. (2013). Missold investments helps Lehman Brothers victims get their money back. Retrieved from http://www.risk.net/structured-products/profile/2275746/missold- investments-helps-lehman-brothers-victims-get-their-money-back Pan, J. (2013). Video shows shocking imbalance of U.S. wealth distribution. Retrieved from http://www.complex.com/tech/2013/03/video-shows-shocking-imbalance-of-us-wealth- distribution 7 Running head: ETHICS CASE ANALYSIS Singer, Z., & You, H. (2011). The Effect of Section 404 of the Sarbanes-Oxley Act on Earnings Quality. Journal Of Accounting, Auditing & Finance, 26(3), 556-589. Wolff, R. (2011). Lehman Brothers: Finally and morally bankrupt [Video file]. Retrieved from http://www.theguardian.com/commentisfree/cifamerica/2011/dec/12/lehman-brothers- bankrupt