2 corporate cultures were built on rewards for taking

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2. Corporate cultures were built on rewards for taking risks rather than rewards for creating value for stakeholders. 3. Subprime lending and executive compensation in poorly performing or failed firms are two areas of ethical concern that emerged out of the most recent recession. The Dodd- Frank Wall Street Reform and Consumer Protection Act was passed in 2010 to increase accountability and transparency in the financial industry and protect consumers from deceptive financial practices. The act established a Consumer Financial Protection Bureau (CFPB) to protect consumers from unsafe financial products. 4. Remember that top executives are ultimately responsible for decisions made by the employees of their companies. Regulatory systems in place failed to catch the systemic risks that were at play during the financial industry meltdown. K. Insider Trading. An insider is any officer, director, or owner of ten percent or more of a class of a company’s securities. 1. There are two types of insider trading: legal and illegal a. Illegal insider trading is the buying or selling of stocks by insiders who possess information that is not yet public.
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b. Legal insider trading involves legally buying and selling stock in an insider’s company, but not all of the time. Insiders are required to report their trades within two days of the transaction. L. Intellectual Property Rights involve the legal protection of intellectual property (IP), such as music, books, and movies. 1. A decision by the Federal Copyright Office (FCO) helped lay the groundwork for IP in a digital world. 2. Digital copyrights continue to be a controversial issue in the United States and across the world, and existing laws are often difficult to enforce. M. Many privacy issues come into play in the business world. Some issues that managers should consider involve monitoring employee use of technology and consumer privacy. It can be a challenge for businesses today to meet the needs of consumers while at the same time protecting their privacy. 1. There are few legal protections of an employee’s right to privacy while at work, which allows employers a great deal of leeway in monitoring employees. 2. Electronic monitoring allows a company to determine whether productivity is lower than it could be because employees are spending too much time on personal activities. 3. Practices that respect employee privacy but do not abdicate the employer’s responsibility help create a climate of trust that promotes opportunities for resolving employee–employer disputes without lawsuits. 4. There are two dimensions to consumer privacy: a. Consumer awareness of information collection b. Growing lack of consumer control over how companies use the personal information they collect. IV. The Challenge of Determining an Ethical Issue in Busines s A. Most ethical issues will become visible through stakeholder concerns about an event, activity, or the results of a business decision. B. Determining ethical issues is a constant challenge. Over time, problems can become ethical issues as a result of changing societal values. C. Once stakeholders trigger ethical issue awareness and individuals openly discuss it and ask for guidance and the opinions of others, one enters the ethical decision-making process.
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