What are business ethics and the social responsibility of business? 2 How are business law and business ethics related? 3 How can we use the WPH framework for ethical business decisions? OPENER Acne Medication and Gastrointestinal Injury Since 1999, Kamie Kendall had experienced ongoing abdominal pain, and she was eventually diagnosed with ulcerative colitis and irritable bowel syndrome (IBD).
LEARNING OBJECTIVES After reading tchapter, you will be able to answer the following questions:1 What are business ethics and the social responsibility of business? 2 How are business law and business ethics related? 3 How can we use the WPH framework for ethical business decisions? OPENER Acne Medication and Gastrointestinal Injury Since 1999, Kamie Kendall had experienced ongoing abdominal pain, and she was eventually diagnosed with ulcerative colitis and irritable bowel syndrome (IBD). Although Kendall had been taking an acne medication, Accutane, since 1997, the medication?s warnings did not mention IBD or ulcerative colitis and, therefore, Kendall had never suspected that her ongoing illness was a result of the medication. Then, in April 2004, Kendall?s grandmother informed her of a lawyer?s television advertisement linking Accutane to ongoing IBD. On December 21, 2005, Kendall filed a lawsuit against Hoffman-LaRoche, the manufacturer of Accutane, alleging that the company was liable for her injuries because the medication?s warnings failed to disclose the risk of developing IBD. Kendall argued that, instead, the medication?s warnings focused on pregnancy and suicide. Further, although the medication warned against abdominal pain, there were no specific warnings, or mention on the consent form, of risk of IBD or colitis. Hoffman-LaRoche moved to dismiss tlawsuit, arguing that the statute of limitations had expired and that Kendall?s suit was untimely. 1. When is it usually considered untimely for plaintiffs to file failure-to-warn lawsuits? 2. If you were in charge of manufacturing acne medication, would you consider it your ethical obligation to list all potential illnesses that may result from your product? The Wrap-Up at the end of the chapter will answer thquestions. Page 16 What a business manager in the situation described in the opening scenario should do is not altogether clear. Ethical conversation is less about finding the one and only right thing to do than it is about finding the better thing to do. Whatever you choose to do, some stakeholders will be hurt and others will benefit. Business ethics requia weighing of the benefits of a decision compared to their harm. Tchapter provides some assistance for thinking systematically about issues of right and wrong in business conduct. Initially, we nto sort through the meaning of key terms like business ethics and social responsibility. Then, because it is helpful to have a useful approach to ethical decision making, we provide a practical method by which future business managers can think more carefully about the ethical dilemmas they will face during their careers.Business Ethics and Social Responsibility LO1 What are business ethics and the social responsibility of business? Ethics is the study and practice of decisions about what is good, or right. Ethics guides us when we are wondering what we should be doing in a particular situation. Business ethics is the application of ethics to the special problems and opportunities experienced by businesspeople. For example, as a business manager, you might someday make a decision that you think is best for your company, as did the advertisers for Accutane, described in the Case Opener. Is a company doing the right thing when it attempts to reduce the costs of advertising by not listing all possible complications of the medicine for the consumer? Such questions present businesses with ethical choices, each of which has advantages and disadvantages. An ethical dilemma is a problem about what a firm should do for which no clear, right decision is available. To see how ethics relates to accounting, please see the Connecting to the Coreactivity on the text website atwww.mhhe.com/kubasek3e. For example, imagine yourself in the position of a business manager at Wells Fargo Bank. You know that providing bank accounts for customers has costs attached to it. You want to cover those costs by charging the customers the cost of their checking accounts. By doing so, you can preserve the bank?s revenue for shareholders and employees of Wells Fargo. So far, the decision seems simple. But an ethical dilemma soon appears. You learn from recent government reports that 12 million families cannot afford to have bank accounts when they are charged a fee to maintain one. You want to do the right thing in tsituation. But what would that be? The study of business ethics can help you resolve tdilemma by suggesting approaches you can use that will show respect for others while maintaining a healthy business enterprise. Making thdecisions would be much easier if managers could focus only on the impact of decisions on the firm. If, for example, a firm had as its only objective the maximization of profits, the right thing to do would be the option that had the largest positive impact on the firm?s profits. But businesses operate in a community. Communities have expectations for behavior of individuals, groups, and businesses. Different communities have different expectations of businesses. Trying to identify what those expectations are and deciding whether to fulfill them complicate business ethics. The community often expects firms to do much more for it than just provide a useful good or service at a reasonable price. For example, a community may expect firms to resist paying bribes, even when the payment of such fees is an ordinary cost of doing business in certain global settings. The social responsibility of business consists of the expectations that the community imposes on firms doing business inside its borders. Thexpectations must be honored to a certain extent, even when a firm wishes to ignore them, because firms are always subject to the implicit threat that legislation will impose social obligations on them. So, if the community expects businesses to obey certain standards of fairness even when the standards interfere with profit maximization, firms that choose to ignore that expectation do so at their peril. See Exhibit 2-1 for a brief look at Pacific Gas and Electric?s approach to social responsibility.Exhibit 2-1 Good Citizenship and ProfitsSource: Code of Conduct from www.pgecorp.com/aboutus/corp_gov/coce.shtml. Page 17 Consider also the financial meltdown of the largest insurance company in the United States, American International Group (AIG). In late October 2011, an investigation by the Government Accountability Office raised questions about the 2008 bailout of AIG by the Federal Reserve. In 2008, the company suddenly collapsed because of risky bets it made insuring mortgage-backed securities. AIG became the source of widespread public outrage after the media revealed that the company had paid $165 million in bonuses two days before its bailout; the public was especially distraught because thpaid bonuses were even distributed to some members of the trading unit that had caused the company?s collapse. The Federal Reserve spent $85 billion bailing out the company, but losses still continued to grow. Later, the government paid a total of $182 billion, setting the record as the largest federal bailout in U.S. history. Business Law and Business Ethics LO2 How are business law and business ethics related? Before business managers consider the social responsibilities of firms in their communities, they nto gather all relevant facts. The legality of the decision in choosing a method of production, how to compete with competing firms, and the social responsibilities of the firm is the minimal standard that must be met for the firm to be an ethical business. But the existence of that minimum standard is essential for the development of business ethics. To make tpoint, let?s take a look at the growing practice of bribery in the absence of such legal standards. In some countries businesses must pay bribes to receive legitimate supplies. Though the businessperson may be morally opposed to paying the bribes, the supplies are necessary to stay in business and there may be no other means of obtaining them. Thus, multinational companies face an ethical dilemma: They must decide whether to pay bribes or find alternative sources of supplies. For instance, when McDonald?s opened its doors in Moscow, it made arrangements to receive its supplies from foreign providers. Tharrangements ensured that the franchise did not have to engage in questionable business practices. Regardless of the ethical and legal implications, there are still multinational corporations that choose to use bribes as a means of doing business in foreign markets. For example, in December 2008, multinational giant Siemens AG was ordered to pay the largest Foreign Corrupt Practices Act (FCPA) fine in history after admitting to acts of bribery worldwide. The company had been using off-the-book slush funds, middlemen posing as agents or company consultants, and even money-filled briefcases to bribe government officials and secure contracts overseas. An FBI agent involved in the Siemens investigation went so far as to say that executives for Siemens used bribery as standard operating procedure and a business strategy. As a result, $1.6 billion later, Siemens AG is now forced to restructure itself to do business ethically and legally. Future business professionals ought to consider not just the moral and monetary costs of engaging in unethical business practices but also the cost of lost business. A tarnished reputation could mean losing contracts, sales, and partnerships in the future. Look at Case 2-1 as an exercise in comparing what is legal with what is ethical. CASE 2-1 UNITED STATES OF AMERICA V. ALFRED CARONIA U.S. DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK 576 F. SUPP. 2D 385 (2008) The defendant, Alfred Caronia, was a sales representative for a pharmaceutical company named Orphan when he was charged for off-label promotion of a drug. The company, now called Jazz Pharmaceutical, had produced a drug named Xyrem, which was a depressant that induced sleep. The main active ingredient in the drug was gamma-hydroxybutyrate, also known as GHB. At the time, the FDA reviewed the drug and stipulated that the drug was a safe way to treat only one condition: cataplexy, which is a narcoleptic condition. Several severe problems had been associated with Xyrem, including dependence and withdrawal symptoms. Other side effects included death, coma, or seizures. The FDA regulations regarding the drug stated that children under 16 should be kept from using the drug, as positive effects had not been observed. Additionally, elderly patients were advised not to use the drug, as limited observations linked positive effects with elderly patients. Caronia was discovered to be marketing Xyrem to physicians for an extra purpose: to combat excessive daytime sleepiness. Tuse had certainly not been approved by the FDA. Page 19 The ethical ramifications of off-label promoting can be severe. In fact, promoting a drug for purposes not approved by the government has been a growing problem with both doctors and pharmaceutical sales representatives. Thcases cast a light on the questionable financial partnerships between pharmaceutical companies and doctors who not only prescribe the drug but also advocate use of the drug. Having medicines prescribed for unapproved uses greatly increases the sales of the medicine and therefore the profits of the company. Unfortunately, the effects of thdeals can lead to harm and even death to the patients taking the prescriptions. In tcase, Caronia moved to dismiss the charges against him, and the court had to consider argument about right to free speech and the FDA?s argument about its job to protect public safety. JUDGE VITALIANO: Pursuant to the FDCA, manufacturers are restricted from marketing so-called off-label (i.e., non-FDA approved) uses of a drug?. Count one of the instant information alleges that, between March 2005 and March 2006, defendant Alfred Caronia, an Orphan sales representative, knowingly and intentionally conspired with others to misbrand a drug by marketing Xyrem for off-label uses in violation of 21 U.S.C. ?? 331(a), (k), 333(a)(1), and 18 U.S.C. ? 371. ? In particular, the information alleges that, on October 26, 2005, Carona promoted Xyrem to a physician John Doe for fibromyalgia, EDS, muscle disorders, chronic pain and fatigue, which uses were for off-label indications. The information further alleges that, on November 2, 2005, Caronia introduced another physician, who was paid by Orphan, to John Doe, and that the other physician promoted Xyrem for off-label indications, including fibromyalgia, EDS, sleepiness, weight loss and chronic fatigue. The information supersedes a prior felony indictment against Caronia and Dr. Peter Gleason, who is the physician allegedly paid by Orphan to promote Xyrem for off-label uses. That indictment charged that Gleason and Caronia participated in a conspiracy with others to introduce a misbranded drug into interstate commerce with intent to defraud and mislead, and to make false statements in connection with the delivery of and payment for health care benefits. The indictment also charged a conspiracy to defraud public and private health care plans. Caronia ? argues that, assuming the lawful reach of the FDCA, he did not misbrand Xyrem within the meaning of 21 U.S.C. ? 352(f) because he administered adequate warnings to the cooperating physician in October and November 2005. Somewhat confusingly, Caronia claims that no matter whether Xyrem is prescribed for on- or off-label indications, it is administered in the same manner and in the same dosage, and, therefore, the potential dangers are identical for all. Accordingly, Caronia says, duty to provide adequate directions was satisfied when he provided the cooperating physician with the black box warning outlining the dangers and side effects of Xyrem, even if he was promoting it for off-label uses. Targument is utterly without merit. It is well established that under the FDA?s intended use regulations, the promotion of a drug for an off-label use by the manufacturer or its representative is prohibited regardless of what directions the manufacturer or representative may give for that use. ? He [also] claims (without any support whatsoever) that warnings were unnecessary because the physician to whom he promoted off-label uses of Xyrem was a confidential informant who was not going to be a user or prescriber of the drug. Yet ? it is the mouth of the promoter not the ear or intent of the audience that controls. Promotion of off-label uses by a drug manufacturer?s representative clearly falls within the broad statutory definition of the offense. On tchallenge, too, count two must be sustained. ? Caronia?s [next] argument is that the government cannot restrict truthful, non-misleading promotion by a pharmaceutical manufacturer (or its employees) to a physician of the off-label uses of an FDA-approved drug. The government rejoins that the First Amendment does not apply to Caronia?s activities as alleged in the information and that, if the First Amendment does apply, the FDCA?s restrictions on promotion of off-label uses are constitutional. ? Caronia?s instant motion to dismiss appropriates an alternative First Amendment argument advanced by Gleason prior to guilty plea. Because he was a doctor expressing opinions about a drug he could and did prescribe, Gleason argued that promotional activities amounted to scientific and academic speech, which resides at the core of the First Amendment and, therefore, should receive the highest constitutional protection as pure speech. Caronia, perhaps recognizing that such an argument would be of little help to him as a sales representative of the manufacturer, does not press the argument that own speech was pure speech. He advances instead the alternate argument Gleason advanced that such promotional activities, if not pure speech, are protected at minimum as commercial speech. ? To determine whether a promotional activity is protectable as commercial speech, a court must look to (1) whether the expression is an advertisement; (2) whether it refers to a specific product; and (3) whether the speaker has an economic motivation for speaking. Regardless what else might have been covered in discussions, Caronia?s alleged speech was made on behalf of the manufacturer and clearly (1) encouraged physicians to prescribe Xyrem, (2) referred to a specific product, and (3) was economically motivated. Any such promotion by Caronia to physicians on behalf of Xyrem?s manufacturer of the drug?s off-label uses would be commercial speech and be entitled to the qualified but nonetheless substantial protection accorded to commercial speech. Finding that Caronia?s alleged promotional activities in marketing Xyrem constitute commercial speech, the Court must now address argument that speech specifically is constitutionally protected. First, as a threshold matter, the Court must determine whether Caronia?s commercial speech concerns unlawful activity or is misleading. If so, then the speech is not protected. Id. If the speech concerns lawful activity and is not misleading, then the Court asks: (2) whether the asserted government interest is substantial; (3) whether the restriction directly advances the government interest asserted; and (4) whether the restriction is not more extensive than necessary to serve that interest. Page 20 ? Under prong one of Central Hudson, the Court finds, in harmony with the analysis in Friedman and the district court?s opinion in Caputo, that promotion of the off-label uses of an FDA-approved drug concerns lawful activity and is not inherently misleading?. Second, the Court finds that the alleged speech is not misleading. In line with thauthorities, tCourt holds that the FDCA?s prohibitions on commercial speech of the kind charged in the information filed against Caronia directly advance the government?s interest in subjecting off-label uses of a drug like Xyrem to the FDA?s evaluation process. Central Hudson?s third prong is satisfied here as well. ? Enter on stage the essential question?can the government satisfy the fourth prong of Central Hudson? ? Simply put, Caronia asks tCourt to extend Western States to undermine the delicate balance between ensuring the integrity of the new drug approval process while allowing patients to continue to have unfettered access to new and potentially life-saving uses for drugs and devices approved only for other purposes. As the Seventh Circuit recognized, such a result could very well leave the FDA only with options that would injure the very audience that would purportedly benefit most from the speech at issue. The Court is disinclined to do so. Quite to the contrary, the Court concludes ? that the prohibitions on the speech which underlie the two counts in which Caronia is charged pass constitutional muster under the fourth prong of Central Hudson. Any right Caronia had as Xyrem?s sales representative to express as commercial speech the truthful promotion of Xyrem?s off-label uses is not unconstitutionally restricted by the misbranding provisions of the FDCA. On tground, Caronia?s motion is also denied. SO ORDEREDCRITICAL THINKING The Caronia case highlights a problematic relationship between pharmaceutical companies and the physicians who prescribe the medications. How could such interactions be dangerous to patients? How, at first, did Caronia?s speech fit under the umbrella of protected free speech? What reason, then, did Judge Vitaliano give for why Caronia?s speech was not protected due to fulfilling the prongs of the Central Hudson test? ETHICAL DECISION MAKING The case mentions a physician named Gleason. Gleason was convicted in association with Orphan Pharmaceuticals prior to Caronia?s case. How was Gleason acting unethically? Business managers must sometimes decide whether to hire and fire particular employees. Their decisions will be guided by legal rules that have both ethical foundations and implications for needed legal reform. In addition, the definition of business ethics refers to standards of business conduct. It does not result in a set of correct decisions.Business ethics can improve business decisions by serving as a reminder not to choose the first business option that comes to mind or the one that enriches us in the short run. But business ethics can never produce a list of correct business decisions that all ethical businesses will make. At the same time that business ethics guides decisions within firms, ethics helps guide the law. Law and business ethics serve as an interactive system?informing and assessing each other. For example, our ethical inclination to encourage trust, dependability, and efficiency in market exchanges shapes many of our business laws. See Exhibit 2-2, for instance. The principles of contract law facilitate market exchanges and trade because the parties to an exchange can count on the enforceability of agreements. Legal rules that govern the exchange have been shaped in large part by our sense of commercial ethics.Exhibit 2-2 Enron, WorldCom, and Shifts in Business RegulationCOMPARING THE LAW OF OTHER COUNTRIES BUSINESS GIFTS AND FAVORS IN CHINA In China, the practice of using guanxi has become an integral part of doing business for firms already located in the country and for those interested in entering the Chinmarket. Guanxi, which refers to a sort of relationship building, is an intricate system of interpersonal networks woven together by social ties. The concept of guanxi is important to individuals involved in business because having good guanxi means having connections that can assist you in getting things that may normally be out of reach to you or your business. The rules and regulations in China can be burdensome, but the rightguanxi, or connections, can make many processes much easier. The guanxi system is built on reciprocity, and if someone does a favor for you, you?ll be expected to return that favor in the future. A favor could technically be any number of things, from access to partnerships, contacts, and government officials to special consideration or useful information. The process of creating and maintaining guanxi may seem somewhat taboo to westerners because businesses in the United States often have strict rules about accepting gifts, doing favors and offering preferential treatment or consideration to clients. However, Dan Mintz, a Brooklyn native with no college degree, who is now the CEO of one of the largest advertising agencies in China, claims guanxi is a necessity when doing business in China. After moving to Beijing with no contacts and little experience, Mintz established own business (Dynamic Marking Group) with two Chinpartners, Peter Xiao and Wu Bing. Both Xiao and Bing had extensive guanxi, networks that extended into high levels of Chingovernment and banking. The trio spent their time targeting potential clients, delivering gifts, and hosting dinners as means to strengthen their guanxi and improve their business opportunities. Through their hard work and strong guanxi Mintz, Xiao, and Bing were eventually able to secure deals with some of the biggest brands in the world: Budweiser, Kraft, Audi, Volkswagen, and Nike. Source: Flora F. Gu, Kineta Hung, and David K. Tse, When Does Guanxi Matter? Issues of Capitalization and Its Dark Sides, Journal of Marketing 72 (July 2008), pp. 12?28;www.fastcompany.com/magazine/104/open_mintz.html?page=0%2C0; andwww.chinasuccessstories.com/2008/02/07/dmg-chinese-advertising/. Page 22 Of course, different ethical understandings prevail in different countries. Thus, ethical conceptions shape business law and business relationships uniquely in each country. Increasingly, business leaders require sensitivity to the differences in legal guidelines in the various countries in which they operate. Thdifferences are based on somewhat different understandings of ethical behavior among businesspeople in diverse countries. As we mentioned above, business ethics does not yield one correct decision. So how are business managers to chart their way through the ethical decision-making process? One source of assistance consists of the general theories and schools of thought about ethics. Each ethical system provides a method for resolving ethical dilemmas by examining duties, consequences, virtues, justice, and so on. A detailed look at each of thethical systems can be found in Appendix 2A. Exhibit 2-2 reminds us that unethical behavior by businesses has huge costs. In the interest of providing future business managers with a practical approach to business ethics that they can use to avoid thcosts, we suggest a three-step approach: the WPH process of ethical decision making. Tapproach offers future business managers someethical guidelines, or practical steps, that provide a dependable stimulus to ethical reasoning in a business context. Appendix 2A provides the theoretical basis for the WPH approach used in tbook. The WPH Framework for Business Ethics LO3 How can we use the WPH framework for ethical business decisions? A useful set of ethical guidelines requirecognition that managerial decisions must meet the following primary criteria: ? The decisions affect particular groups of stakeholders in the operations of the firm. The pertinent question is thus, Whom would tdecision affect? ? The decisions are made in pursuit of a particular purpose. Business decisions are instruments toward an ethical end. ? The decisions must meet the standards of action-oriented business behavior. Managers na doable set of guidelines for how to make ethical decisions. The remainder of tchapter explains and illustrates tframework. See Exhibit 2-3 for a summary of the key WPH elements. Exhibit 2-3 The WPH Process of Ethical Decision MakingPage 23 WHO ARE THE RELEVANT STAKEHOLDERS? The stakeholders of a firm are the many groups of people affected by the firm?s decisions. Any given managerial decision affects, in varying degrees, the following stakeholders: 1. Owners or shareholders. 2. Employees. 3. Customers. 4. Management. 5. The general community where the firm operates. 6. Future generations. Exhibit 2-4 gives a portrait of General Mills? commitments to its primary stakeholders and demonstrates that General Mills is aware of the people involved in its various decisions. Exhibit 2-4 Commitments to General Mills? StakeholdersWhen you consider the relevant stakeholders, try to go beyond the obvious. In the Case Nugget (next page), Maria?s encounter with her company?s vice president clearly highlights certain common interests of management and its employees. However, a useful exercise for all of us is to force ourselves to think more broadly about additional stakeholders who may be affected just as much in the long run. Then we will be less likely to make decisions that have unintended negative ethical impacts. Maria?s ethical dilemma is complex. Many of the issues in the dilemma pertain to her career and the welfare of her firm. But consider the many stakeholders whose interests were not introduced into the conversation. When we overlook important, relevant stakeholders, we are ignoring a significant component of ethical reasoning. Consider the negative impact that results when a firm fails to show adequate respect for a major stakeholder. On December 3, 1984, a horrible catastrophe occurred at a chemical plant in Bhopal, India. The plant was a subsidiary of Union Carbide. Damage to some equipment resulted in the emission of a deadly gas, methyl isocyanate, into the atmosphere. The emission of the gas caused injuries to more than 200,000 workers and other people in the neighborhood of the chemical plant. Several thousand people died. Page 24 HYPOTHETICAL CASE NUGGET THE MANY STAKEHOLDERS IN A BUSINESS DECISION Maria Lopez Maria recently became the purchasing manager of a small lawn-mower manufacturing firm. She is excited about the opportunity to demonstrate her abilities in tnew responsibility. She is very aware that several others in the firm are watching her closely because they do not believe she deserves the purchasing manager position. Her new job at the firm requithat she interact with several senior managers and leaders. One vice president in particular, Brian O?Malley, is someone she admibecause he has earned the respect of the CEO on the basis of success at making profits for the firm. Again and again, he just seems to know how to discover and take advantage of competitive opportunities that end up paying off royally for the firm. Maria?s first responsibility is to buy the motors for the assembly line. The motors constitute 30 percent of the total construction cost of the lawn mowers. Consequently, even a small error on Maria?s part would have huge implications for the firm?s profitability. The bids from the motor suppliers are required to be secret in order to maximize competition among the suppliers. The bids are due at 5 p.m. today. At 3 p.m., Maria accidentally sees Brian returning the submitted bids to the locked safe where they are to be stored, according to company policy, until all bids have been submitted at 5 p.m. Then at 4:45 p.m., she notices a postal delivery of a bid from Stein?s Motor Company. Her head buzzes as it hits her that Stein?s president is one of Brian O?Malley?s cousins. She has no idea what to do. However, she knows she has to decide quickly. Many factors, including worker error, faulty management decisions, equipment failures, and poor safety standards combined to cause the accident. Union Carbide was accused of not demanding the same rigorous safety standards in India as it had in the United States. Citizens of both India and the United States demanded that the corporation be held responsible for its evident neglect of safety. Union Carbide argued that it could not operate the plant if it were required to obey rigid Indian safety standards and that the economic benefits of the plant to India outweighed the risks of not following thstandards. After years of litigation in both U.S. and Indian courts, Union Carbide was eventually ordered to monetarily compensate the victims of the accident. Among other factors, Union Carbide?s failure to respect the interests of a major stakeholder resulted in a disaster for the firm and for the community. After we consider stakeholders, the next step in the WPH framework is to consider the purpose of business decisions. In the next section, we look first at the parties involved, and then we explore the purposes that bring thvarious parties together in a common effort. WHAT ARE THE ULTIMATE PURPOSES OF THE DECISION? When we think about the ultimate reason or purpose for why we make decisions in a business firm, we turn to the basic unit of business ethics?values. Values are positive abstractions that capture our sense of what is good or desirable. They are ideas that underlie conversations about business ethics. We derive our ethics from the interplay of values. Values represent our understanding of the purposes we will fulfill by making particular decisions. For example, we value honesty. We want to live in communities where the trust that we associate with honesty prevails in our negotiations with one another. Business depends on the maintenance of a high degree of trust. No contract can protect us completely against every possible contingency. So we nsome element of trust in one another when we buy and sell. Page 25 When that trust is lacking, businesses fall apart. In August 2011, Maryland and Connecticut sued 16 banks for alleged rate manipulation. In the following weeks, additional banks in New York were served subpoenas, under the Martin Act, which allows investigation of businesses in New York that may have committed deceitful practices contrary to the plain rules of common honesty. Robert Schapiro, the undersecretary of commerce for economic affairs in the Clinton administration, stated, So long as big finance will do almost anything to goose its own profits and bonuses, self-regulation is a dangerous myth. If we think about the definition of values for a moment, we realize two things immediately. First, there are a huge number of values that pull and push our decisions. For example, the banks mentioned above may have thought of honesty as an important value,
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