On a Couple of Days in February — The Headlines Spoke Volumes and Show a Trend

February 3-4, 2011

•“SEC Sues Over Bug in ‘Quant’ Program,” Wall Street Journal, February 4, 2011, p. C1 –AXA SA agreed to pay $242 million to settle fraud charges that it hid material information from clients through the use of complex computer models and a secretive culture

•“32% Admit Mooching Off Neighbor’s Wi-Fi,” USA Today, February 4, 2011, p. 1B. –Neighbors admit to borrowing their neighbors’ unencrypted Wi-Fi connections.  The number of piggy-backers has doubled since 2008. –Terrorists, pedophiles, and identity thieves are known piggy-backers but were not part of the survey (to the best of the survey company’s knowledge and discernment) –Firesheep, a free eavesdropping tool, has been downloaded more than 1,000,000 times since 2010.

•“States Widen Currency-Trade Probes,” Wall Street Journal, February 3, 2011, p. A1. States are investigating whether banks charged their state pension funds the highest possible foreign-exchange rate for currency trades on the day of the trades instead of the rate at the time the trades were made.

•“Flurry of Data as Rules Near for Commercial Colleges,” New York Times, February 4, 2011, p. A11. –The Department of Education finishes promulgating rules that will require more disclosure of the financial performance and loans at for-profit colleges following disclosure of higher default rates of for-profit school students than for nonprofit school students.

•“Despite Doubts JP Morgan Kept Ties to Madoff,” New York Times, February 4, 2011, p. A1. –A suit by the trustee in the Madoff bankruptcy against JP Morgan Chase to recover funds from the bank for its failure to follow advice of internal risk officers who said that the returns from Madoff did not make sense.

•“Harvard Changes Course,” Wall Street Journal, February 3, 2011, p. B8. –“The public lost trust in business, and some of our graduates seems to be responsible for that.”  Harvard Business School Dean Nitin Nohria –The new curriculum will include an increased focus on ethics.

•“Ex-Banker in Britain Sentenced to 3 Years for Insider Trading,” New York Times, February 3, 2011, p. B3. –Christian Littlewood, a former investment banker at Dresden Kleinwort entered a guilty plea to insider trading on the shares of Highway Insurance in advance of the company’s announcement of a takeover offer.  The company’s stock jumped and Mr. Littlewood, his wife, Angie, and Helmy Omar Sa’aid, a friend, made ₤1 million.  Angie and Helmy were also sentenced. –British authorities had found over 22 incidents of advance share purchases by the trios on the even of takeover announcements that Mr. Littlewood’s employer was handling.  Mrs. Littlewood used an account with her maiden name to make the trades and hold the cash profits.  The three invested £5.5 million over 10 years and had about a 25% ROI. –Helmy was extradited Comoros Islands off the coast of Africa. British officials found him there after finding an address for the shipment of pizza ovens to Comoros at his London home. 

•“S.E.C. Hurt By Disarray In Its Books,” New York Times, February 3, 2011, p. B1. –“A reasonable possibility exists that a material misstatement of S.E.C.’s financial statements would not be prevented, or detected and corrected on a timely basis.”  from the audit report on the SEC’s financial statements. –The auditor found errors in the agency’s tracking of income from fines, filing fees, and the return of ill-gotten profits.

•“S.E.C. Charges 6 in Insider Trading Cases,” New York Times, February 4, 2011, p. B7. –The charges relate to executives at companies moonlighting as experts for hedge funds.

•“Afghan Minister Denies Allegations of Bribery,” Wall Street Journal, February 3, 2011, p. A8. –Finance Minister Omar Zakhilwal and former Interior Minister Haneef Atmar denied that they took payoffs from Kabul Bank –Afghan president Hamid Karzai’s brother Mahmood owns a 7% interest in the bank.

•“India Ex-Minister Arrested in Telecom Scandal,” Wall Street Journal, February 3, 2011, p. A8. –Former telecom minister Andimuthu Raja and two of his former aides were arrested and accused of irregularities in the allocation of telephone spectrum.  –The Central Bureau of Investigation alleges that Raja underpriced cell phone frequencies by $40 billion.

•“Video Scandal Hits Planned Parenthood,” Wall Street Journal, February 3, 2011, p. A3. –Planned Parenthood released a statement of shock when it was shown undercover videos that showed employees at Planned Parenthood clinics in New Jersey providing advice about abortion, contraceptives, and treatments for sexually transmitted diseases for girls who were as young as 14 and possible illegal immigrants.

•“SEC Files Insider Charges Against Six,” Wall Street Journal, February 4, 2011, p. C3. –Four consultants and two former employees of an “expert networking” firm were charged with violating insider trading laws when they passed along information from company insiders to hedge funds.

•“Renault Case Yields New Suit,” Wall Street Journal, February 3, 2011, p. B3. –Espionage allegations against top executives continue as new lawsuits emerge.

•“Match-Fixing Claims Hit Sumo Wrestlers,” Wall Street Journal, February 3, 2011, p. A8. –Japan’s ancient sport of sumo wrestling has been rocked, as it were, by allegations that 13 wrestlers may have fixed matches.

For those of you keeping score — 16 headlines, and they are not pretty. The Barometer must stop — oh, what times are these when we lose the great sumo wrestlers to corruption!

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
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