ethics and morality in business

Crisis Of Trust

TYCO CEO’s $6000 shower curtain

Tyco probe may expand

$15000 Dog umbrella stand$14000 portable potty

SEC Bars Ex-Tyco Auditor

PricewaterhouseCoopers partner Richard P. Scalzo. Under the settlement, Scalzo, Tyco's lead auditor from 1997 to 2001, is permanently barred from working on any part of a public company's finances. The SEC found that Scalzo violated securities law by overlooking material facts in his audit of the company. Scalzo also shirked on the SEC's rules of professional conduct.

Enron files for bankruptcy

ENRON WHISTLE BLOWER

ENRON WHISTLE BLOWER

ENRON WHISTLE BLOWER

Here comes

the crook

Jeff,I heard You get vegetarian diet in the jail

I hope my jail mate is not former TYCO CEO

I love 5th amendment

Former Enron Exec Kopper to Plead Guilty

Kopper admitsto laundering and fraud, agrees to

help Feds in case

Wow ! My boss made so much money - but won’t give me a 5% raise?

Yes - You did !

Andersen CEO Andersen Partner

We did not ask him to

shred

Yes ! I ordered the shredding

Worldcom to restate the numbers

WorldCom facing world of obstacles

WorldCom files for bankruptcy

EBBERS GETS 25 YEARS

EBBERS GETS 25 YEARS

Former WorldCom chief, 63 years-old, could spend the rest of his life in prison.

Worldcom Controller

                                                                      More Accounting Woes For Xerox

Xerox was forced to restate earnings to reflect $1.4 billion less in pre-tax profits over the past five years as part of a settlement with the SEC

which also included a $10 million penalty.

Adelphia CEO arrested

Adelphia Files Lawsuit Against John Rigas and Other Former Executives and Board Members of Adelphia

Adelphia CEO arrested

Qwest to restate the numbers

Federal regulators believe that Qwest Communications

International Inc.’s disclosure late Sunday night that it improperly

accounted for more than $1.1 billion of transactions during the past three years raises questions that need

further investigation, according to people

familiar with the matter

SEC gets tough on Qwest accounting

When did Martha call the broker ?Martha’s broker blames his assistant

Stewart convicted on all charges

Jury finds style maven, ex-broker guilty of obstructing justice and lying to investigators

Martha Stewart Gets 5 Months in Jail

Lea Fastow enters prison

Wife of ex-Enron CFO Andrew Fastow begins day one of one-year jail term Monday

Imclone CEO indicted

Feds want Waksal behind bars

In plea negotiations, prosecutors seek prison term of 7-to-10 years , indictments of family.July 30, 2002: 9:36 AM EDT NEW YORK (CNN/Money) - Federal prosecutors have demanded during plea negotiations that former ImClone CEO Samuel Waksal serve a 7- to 10-year prison term for charges related to insider trading and are not willing to let his family members get off easy, a source close to the situation confirmed to CNN/Money Tuesday.

ImClone’s CEO Arrested

ImClone’s complex connections

Salomon telecom analyst Grubman quits

Controversial Salomon Smith Barney telecommunications analyst Jack Grubman, once one of Wall Street's biggest stars and dealmakers, resigned Thursday.

Grubman, the subject of congressional and regulatory probes, is the latest casualty of the telecom meltdown that has wiped out $2 trillion in shareholder wealth and sent once-soaring companies, such as WorldCom and Global

Crossing, to bankruptcy court.

Too Close for Comfort

GE's legendary former CEO Jack Welch kicks up a controversy over his affair with a journalist

Jack Welch’s perks after retirement

The divorce papers filed by Welch's wife, Jane, detail his use of an $80,000 per month Manhattan apartment owned by the company, court-side seats to the New York Knicks and U.S. Open, seating at Wimbledon, box seats at Red Sox and Yankees baseball games, country club fees, security services, and restaurant bills,

SEC probes Williams energy trading

Inquiry into trading volumes, methods determining reserves

Aug. 16 — Opening a fresh line of inquiry into Williams Cos., the Securities and Exchange Commission has asked the energy concern for information about how it accounts for credit and “prudency” reserves associated with its trading business.

SEC Chief Vows Ongoing Audit Probe of Halliburton

SEC investigates Halliburton

Now that President Bush has alreadytold in public that SEC will clear Cheney –I wonder What else I can do!

Harvey PittChairman - SEC

Davide Dukcevich, 06.04.04, 1:00 PM ET

NEW YORK - Tech giant Computer Associates (nyse: CA - news -

people ) said that Chief Software Architect Sanjay Kumar will resign from the company as the firm tries

to resolve a criminal investigation into its accounting.

Computer Associates said it is committed to reaching a settlement of the government's probe as soon

as possible, and that Kumar's decision to step down was made in that spirit. Kumar, who resigned as

chairman and chief executive in April, will cease all involvement with

the firm, effective immediately.

Computer Associates' Sanjay Kumar Resigns

Senate passes fraud bill

Fraud bill rushed through Congress

Average investor - Screwed

Scamming CEOs have accomplished what Osama bin Laden could not – i.e. denting our spirit.

Can anything restore our faith in the stock markets?

Summer Of Mistrust

Many CEOs bend the rules (of golf)

In that survey, commissioned by Starwood Hotels & Resorts, 82 percent of 401 high-ranking corporate executives admit to being less than honest on the golf course

Morality and Ethics - Definition

Morality Involves limitations on behavior Limitations often benefit others Limitations are often contrary to self-

interest Limitations are based on principles of

right and wrong

Ethics Social rules that govern conduct Implementation of Morality + Etiquette Organizational ethics Personal Ethics:  Informed by Sense of

(& Commitment to) Moral Standards Professional Ethics:  Also informed by

professional self-interest

The Serbanes Oxley Bill

Sets guidelines for accounting oversight board with limited authority Names two things auditors can't do for audit clients and asks SEC to name more,

if needed Outlaws executive interference with audits Requires immediate disclosure of material information, including insider trades

and loans to officers Outlaws executive stock trades during pension-fund "blackout" periods Requires periodic disclosure of off-balance-sheet transactions, asks SEC if other

changes needed Tells companies to disclose when they change their ethics codes Tells SEC to toughen corporate transparency rules Tells SEC to review financial statements more often Makes accountants keep audit papers for 7 years Strengthens SEC's ability to bar violators from serving as corporate officers Lets SEC take profits from officers who sold stock before restating finances Tells SEC to give to Enron employees money it takes from Enron or Andersen officers Asks for government studies of analysts, corporate governance and other subjects Exempts investment companies from 6 of these requirements

Sarbanes-Oxley Act of 2002

Corporate responsibility Enhanced Financial disclosures Auditor independence Professional responsibility rules

for attorneys Public Company Accounting

oversight board Other provisions

• Research Analysts• Whistle blower protection• Corporate Tax Returns• Temporary Freeze Authority

Ethics

Trust

Morality

SEC paperwork requirements Serbanes – Oxley Bill aka Fraud Bill

10 Q to Personal liability

Not just companies with $1Billion revenue – But all public companies

Detailed certification witgh every 10K and 10Q

Corporate responsibility

Audit committees

Certification of Financial Statements

Improper influence

Bonus and compensation forfeiture following accounting statement

Insider trading pension fund blackout period

Enhanced Financial Disclosures

Accuracy of financial reports Off-Balance sheet transactions Presentation of Pro Forma

Financial information Prohibition on personal loans to

officers and Directors Reporting of stock transactions Internal Controls Code of ethics for senior

officers Audit committee financial expert Enhanced SEC review Real Time disclosures

Auditor independence

Prohibited Non-Audit services

Audit committee pre-approval of Audit and Non-Audit Services

Audit partner rotation

Reports to Audit committee

Conflicts of Interest

Other provisions

Research Analysts

Criminal provisions for destruction

Debts in Bankruptcy

Extended statute of limitations of security fraud claims

Whistleblower protection

Corporate tax returns

Temporary freeze authority

Officer and Director Bars

Antitrust – Contact with Competitors

Agreements or Understandings with Competitors

Discussions Regarding Price or Other Competitive Issues

Discounts and Production Limits

Trade Association Risks

Bid Rigging

Market Allocation

Supplier Antitrust Issues

E-mail Dangers

Gifts and Conflicts of Interest

Working Ethically with Suppliers, Vendors and other Business Partners

Receiving Gifts Receiving Hospitality and

Entertainment Giving Gifts Offering Hospitality and

Entertainment "Friends and Family" Stock

Offerings Investments as Potential

Conflicts of Interest Outside Employment Family Interests

Mutual Respect

Avoiding Workplace Harassment

Sexual Harassment "Electronic" Harassment Harassment on the Basis of

Race or Ethnicity Harassment on the Basis of

Age Harassment on the Basis of

Other Protected Characteristics

Reporting and Responding to Harassment in the Workplace

Price Discrimination (Robinson-Patman Act)

Illegal Price Discrimination in the Sale of Goods

Injuring Competition "Meeting Competition"

Defense "Cost Justification" Defense "Changing Market

Conditions" Defense "Availability" Defense

Code of Conduct – Doing business with Integrity

The Company's Commitment to Doing Business with Integrity

Handling Ethical Dilemmas (e.g., a Competitor's Confidential Information)

Compliance and Business Ethics Program

Code of Business Conduct Compliance Help line and

Other Program Resources Reporting Violations and

Asking Questions An Employee's Personal

Responsibility Policy Certification (optional)

EEO and Workplace Conduct for Managers

Avoiding Discrimination in Hiring

Employee Leave Issues Working with Disabled

Employees (ADA and related issues)

Wage and Hour Issues Dealing with Problems in the

Workplace Responding to Misconduct

and Complaints Avoiding Discrimination in

Terminations

Intellectual Property

Protecting Your Company's IP

Appropriate Use of Others' IP

Confidential Information

Trade Secrets

Trademarks

Copyrights

Patents

Summary

Ethics and Morality in an organization is a process and not an event

The Serbanes Oxley Bill is the first step _ We have long ways to go

Organizational ethics and Personal Ethics

Corporate responsibility

Auditor independence

Gifts and Conflicts of Interest

Code of Conduct – Doing business with Integrity

Finally : Many CEOs bend the rules (of golf)

Jay Srinivasan

h kn o uy

QUESTIONS ?QUESTIONS ?