Question

The IMA’s Statement of Ethical Professional Practice was designed to help finance professionals “to link ethical perspectives directly to their ongoing workplace responsibilities.” Unfortunately, some individuals may choose to act unethically and perhaps cause great harm to other individuals and organizations. In each of the following examples, determine which of the four standards of ethical conduct has been violated. Some examples may violate more than one standard.

a.	Douglas Faneuil was a Merrill Lynch brokerage assistant who was involved in Martha Stewart’s sale of ImClone stock. During the investigation, he lied to federal investigators, saying that there was a standing order to sell the stock if the share price fell below $60. In return for lying, Mr. Faneuil reportedly received money, airplane tickets, and an extra week’s vacation.	Competence, Credibility and IntegrityCompetence and IntegrityConfidentialityCredibility and IntegrityCompetenceCompetence and ConfidentialityCompetence and CredibilityCredibilityIntegrityConfidentiality and Integrity
b.	The day after Sam Waksal, ImClone’s CEO, learned that the Food and Drug Administration was not going to review ImClone’s application for approval of a new cancer drug, family members sold $10 million in ImClone stock. Mr. Waksal reportedly shared the information about the failed review with his family.	Competence and IntegrityCredibility and IntegrityCredibilityIntegrityCompetenceConfidentiality and IntegrityCompetence and CredibilityCompetence and ConfidentialityCompetence, Credibility and IntegrityConfidentiality
c.	Scott Sullivan, WorldCom’s chief financial officer, recorded billions of dollars of operating expenses as capital assets. Depreciating these “assets” over time inflated the company’s profits and hid the expenses from the company’s auditors.	Competence and CredibilityCompetence and ConfidentialityCredibilityCompetence and IntegrityCompetenceConfidentialityCompetence, Credibility and IntegrityCredibility and IntegrityConfidentiality and IntegrityIntegrity
d.	Adelphia co-signed loans of $3 billion with its founders, the Rigas family, who used the proceeds of the loans to purchase shares of Adelphia stock and other personal items. The family did not disclose the loans to the board of directors. When the company’s auditors discovered the loans and asked the Rigases to report them to the board, the family refused. The auditors did not report the issue to Adelphia’s audit committee.	IntegrityCredibilityConfidentiality and IntegrityCompetenceCredibility and IntegrityConfidentialityCompetence and CredibilityCompetence, Credibility and IntegrityCompetence and ConfidentialityCompetence and Integrity

Answer 1

a) The Douglas Fanuel is violated the standards of ethical conduct of competence, credibility and integrity competence. The analysis of the violation is as follows:

Mr. Fanuel has not followed the pricing guidelines of the stock while selling the stock. So he violated the Integrity competence. and Mr.Fanuel managed the federal investigators, order is there in support of sale by taking income for managing is violating the credibility.

b) Mr. Waksal and his family members are violated the standards of ethical conduct of Confidentiality competence, credibilty and Integrity confidentiality. The analysis for the violation is as follows:

Mr. Waksal has shared the confidential information to the family members and the family members sold the drugs without the permission from the required authority so they violated the integrity, credibility principles.

c) Mr. Scott Sullivan has violated the principles of Competence and Credibility competence. The analysis of the violation is as follows:

Mr. Scott Sullivan has violated the competence by recording the revenue expenses as capital expenditure and viloated the credibility by hiding this information from Auditors.

d) The Riga's family and the Adelphia auditors are violated the principles of Integritycompetencecredibility. The analysis of the violation is as follows:

The Riga's family by refusing to disclose the loans has violated the priciples of integrity and Riga's family successfully managed the auditors by not giving the comment on the disclosure of loans by Riga's family the violation of competecnce and the Auditors of the company is violated the principles of Integrity and credibility by hiding the Riga's loans information in their audit report