Ethics 2

Legislation introduced to control bribery and other less obvious forms of payment to foreign officials and politicians by US publicly traded companies

FCPA

SEC could fine companies for failing to disclose such payments under its securities rules. The Bank Secrecy Act required full disclosure of funds that were taken out of or brought into the US. The Mail Fraud Act Made use of the US main or wire communication to transact a fraudulent scheme illegal.

Pre FCPA

FCPA requirement that corporation fully disclose any and all transactions conducted with foreign officials and politicians. (Show the transaction)

Disclosure

FCPA inclusion of wording from the Bank Secrecy Act and Mail Fraud Act to prevent the movement of funds overseas for the express purpose of conducting a fraudulent scheme. (Stop the fraud)

Prohibition

acceptable/ legal provided they expedite or secure the performance of a routine governmental action. “Speed up routine work, not new contract”

Facilitation Payments

any regular administrative process or procedure, excluding any action taken by a foreign official in the deicison to award new or continuing business. “Routine excludes awarding business”

Routine governmental action

Grease Payments, marketing expenses, payments lawful under foreign laws, polictial contributions, donation to foreign charities.m

Legal under FCPA

Bride, not keeping required record keeping and accounting provisions, inducing officials to act in violation of their lawful duty

Illegal under FCPA

Fine up to $250,000 per violation and five year in prison.

Enforcement/Individual Penalties of FCPA

Focus on information and tips regarding asset management, market abuse, complex derivatives and financial products, foreign corrupt practices, municipal securities and public pensions. (Office gather tips about financial misconduct)

Office of Market Intelligence

Ch 8 of the guidelines that hold businesses liable for the criminal acts of their employees and agents. Requires that organizations police themselves by preventing and detecting the criminal activity of their employees and agents. (accountable for employee crime)

FSGO

Promote ethical organizational behavior and increase the costs of unethical behavior

Mission of FSGO

monetary fines, organizational punishment, implementation of an operational program.

Penalties under FSGO

The greatest of: monetary gain to the organization from the offense; monetary loss from the offense by the organization, to the extent the loss was causes knowingly. amount determined by judged based on a FSGO table. (choose biggest of three amounts)

Base Fine

Calculation of a degree of blame or guilt that is used as a multiplier of up to 4 times the base fine. Can be aggravated, up. Or mitigated, down.

Culpability Score

high level personnel were involved in or tolerated the criminal activity. Organization willfully obstructed justice. Organization had a prior history of similar misconduct. Current offense violated a judicial order, an injunction, or a condition of probation. (adds blame)

Aggravating factors

organization had an effective program to prevent and detect violations. self reported the offense, cooperated in the investigation, and accepted responsibility. (reduces blame)

Mitigating factors

Base fine x culpability score

Total Fine=

Fine set high enough to match all the organizations assets. Is warranted where the organization is operating primarily for criminal purpose. (wiping out all business assets)

Death Penalty

Sentenced for up to 5 years

Organizational Probation

Oversee, set, communicate, comply, delegate, discipline, correct

FSGO steps for an effective compliance program

Required companies to periodically evaluate the effectiveness of their compliance programs, required evidence of actively promoting ethical conduct rather than just complying with the legal obligations; defined accountability more clearly. (actively build ethics)

Revised FSGO

created in response to the scandals in the early 2002s. audits, reporting to better corporates wrongdoing. Delivers a collection of tools and penalties to punish offenders with severity. Does not help in creating an ethical corporate culture.

SOX 2002

Expensive to comply- leaves the little guy out. Discouraged foreign companies from listing on the US stock exchange.

SOX repercussions

government agency within the federal reserve that oversees financial products and services. handles consumer protection responsibilities. (consumers)

Dodd- Frank CFPB

Government agency established to prevent banks from failing and otherwise threatening the stability of the US economy (stability)

Dodd-Frank FSOC

Limits the ability of banks to trade on their own accounts in any way that might threaten the financial stability of the institution (limits risky bank trading)

Dodd-Frank Volcker Rule

Charged With: Maintaining compliance with established standards. Enforcing rules and disciplinary procedures for those organizations that found themselves out of compliance.

Title 1: Public Company Accounting Oversight Board

Requires CEOS and CFOS to certify quarterly and annual reports to the SEC

Title 3: Corporate Responsibility

Protects employees who provide evidence of fraud

Title 8: Corporate and Criminal Fraud Accountability

Requires CEOs and CFOS to certify their periodic reports and imposes penalties for certifying a misleading or fraudulent report

Title 9: White Collar Crime Penalty Enchancemen’s:

Employee who discovers corporate misconduct and chooses to bring it to the attention of others

Whistle Blower

Employee discovering corporate misconduct and bringing it to the attention of their supervisor. inside the company

Internal Whistle Blowing

Employee discovering corporate misconduct and choosing to bring it to the attention of law enforcement or media. outside the company.

External Whistle Blowing

applauded as models of honor or integrity. Discovery of illegal activities before the situation is revealed in the media saving company money. Protects the public.

Benefits of Whistle Blowing

may be considered to be motivated by money or personal egos, or to have breached the trust and loyalty they own to their employees

Criticisms of Whistle Blowing

Employee must have documented evidence that: their view of the situation is accurate, the firms practice, product or policy threatens the public or product user

Reason why whistle blowing is ethical

when its motivation is vendetta against the company or employee of the company, financial gain, media attention.

Reason why whistle blowing is unethical

Established to protect the gov from fraudulent defense contractors. Whistle blowers who expose fraudulent behavior against the gov are entitled to between 10 and 30 percent of the amount recovered. Fraud against gov; share of recovery

Civil False Claims Act (Lincolns Law)

brought on behalf of the federal government by whistle blower under the false claims act of 1863 (whistle blower sues on behalf of government)

Qui Tam lawsuits

responding to whistle blowers=addressing concerns/not firing them

Duty to respond

retaliation protection, addressed retaliation against federal employees. specific performance deadlines in processing whistle blower complaints. guaranteed anonymity of whistle blower unless revealing the name would prevent criminal activity

Whistle Blower Protection 1989

prohibiting retaliation against whistle blowers. encouraging the act of whistle blowing itself. dont punish someone for reporting

SOX in whistle blowing

new reward program for whistle blowers who report securities law violation to the SEC and CFTC. if over $1 million is collected, the whistle blower is entitled to 10-30% of collected amount.

Dodd Frank Whistle blower rewards

well defined process to handle whistle blower complaints. whistle blower hotline for employees to anonymously report suspected misconduct. prompt and thorough investigation of all complaint. hotline/investigate/document

Addressing the needs of whistle blowers

executives prefer to: bury the info, discredit the evidence. tie their employees in restrictives confidentiality agreements.

Whistle blowing as a last resort

Sherron Watkins- Enron; Coleen Rowley-FBI; Cynthia Cooper-WorldCom

2002 Time persons of the year

90% of whistle blowers fired or demoted, 27% faced lawsuits, 26% sought psychiatric or physical care. 15% got divorced, 10% attempted suicide, 8% went bankrupt, only 16% said they would not do it again

2023 Whistle blower study

companys internal website, containing info for employee access only.

Intranet

private piece of a companys internet network that is made available to customers and/ or vendor partners on the basis of secured access by unique access. external partners get secure access

extranet

sharing documents and info; collaborating and inputting on docs from offices across the country; accessing and integrating company data; storing data and creating reports

Online collaborative software

employee monitoring; access to customers personal data

Disadvantage: loss of privacy

organization has an obligation to stakeholders to operate efficiently and ensure company resources are not being misused or stolen and company data proprietary info are closley guarded. monitoring of work related activity will not be infringement of privacy

Employer View

Technology blurs the line between work and personal life. employees should know about any surveillance and why. just because some people break the rules does not justify invading everyones privacy.

Employee View

ability to work remotely and log in to the company network. Availability=accessibility. employees expect flexibility for personal needs at work in return for their flexible availability during personal time

Telecommuting

employee has little choice

Thin consent

employee has an alternative to unacceptable monitoring. has options

thick consent

legal concept when a supervisor or company is held responsible for the actions of their employees actions

Vicarious liability

applies the legal concept of liability to the world of computers. employers can be held vicariously liable for the actions of their employees internet communications and activities

Cyberliability

using weak passwords, oversharing info on social media sites. retaining default passwords

Riskiest employee cybersecurity issue

technology to monitor keystrokes, track websites visited, and record calls, a “locked down” place to work can drive away employees who are not comfortable being monitored. employee turnover increases recruitment costs, training costs, and lost productivity.

Monitoring tools and consequences

ethical issues, plagiarism, propaganda, fake news, lost jobs, declines in creativity. responsible uses: monitoring behavior to identify and address unethical behavior, training employees to use Ai responsibly

AI impact on work

do not harm, interfere, snoop, steal, lie or pirate. Ask permission, respect ownership, think impacts, respect people

Commandments