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Running head: ETHICS CASE ANALYSIS







Ethics Case Analysis
Yifan Guo
Keiser University
Dr. Eggertsson
MAN551GH3
07/13/2014
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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,
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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
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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
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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.
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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
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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