Ethical Business Challenges Today

Response to the Questions on Page 122

1. Legal issues are related to buying and selling stock by collusion. Albert sometimes used insider information to trade successfully, and it is illegal. There are also ethical issues. It is unfair to use insider information or even to obtain it. All traders should operate in equal conditions. It is also unethical to use insider information to trade or give it to others in order to help them and to make their state better.

2. Albert could keep from using the insider information. He might know it, but not use it. However, he has used the insider information with a great benefit. Due to it, he has gained good earnings. Such situation has an advantage, because it is profitable. Nevertheless, using the insider information or passing it to others is prohibited. It is also unethical to use it, because trading becomes unfair.

Albert has made a decision to use the insider information. It has been beneficial to him, because he has gained higher profits in comparison to his colleagues. However, he could have been punished for it, because it is illegal.

3. These issues have been caused by several pressures. The most important of them is the pressure of society where Albert and Mary live. Likely, other brokers have persuaded them to act properly, to buy proper things, to communicate with the right people. Maybe, some brokers have done the good trades before using the insider information; and it have raptured Albert and Mary. The other pressure might have been created by Albert’s parents. They could have loved Mary mainly for her good earnings, so Mary might have tried to meet their expectations.

Response to the Questions on Page 269

1. Soumey should change several areas of ethics audit. The hotline should be made anonymous. It is illegal and unethical to make it open but not to tell about it. The racial discrimination exists, too. Most Spanish workers work during the night shift and they are underpaid. There are also issues related to workers’ reporting and dishonesty. In order to gain higher salaries, the company has kept back the fact of a toxic spill. Such situations should be audited better. The fact of corruption has also taken place. To make ethic audit more open and disinterested, Soumey should use the services of external audit companies.

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2. Jerry has a legal duty to report about the things he heard to an outside authority. However, it should refer only to the facts that make influence on the company’s activity, legal issues, and ethical issues; and Jerry should be confident that this information is true and reliable.

3. Soumey’s board of directors consists of John Jacobs, Soumey’s president; Alan Kerns, a retired Soumey executive; Alice Finkelstein, a retired executive from a similar company; Latisha Timme, a consultant within the industry; and Jerry, John’s friend. To my opinion, such makeup is not ethical. Two of five members are from this company. They may know each other well and be in collusion. It would be better for Soumey to set up a competition where candidates could pass some tests and an interview in order to be selected to the board of directors. It would be more ethical to select members who are not connected with Soumey, but better from the same industry.

4. Jerry is liable for the issues associated with Soumey over the last three years, because he is a member of the board of directors. However, his liability is limited by his authority. He is not responsible for ethical audit, because the ethics compliance officer is Alan. Nevertheless, Jerry should report about any ethical issues occurred.

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