Analyzing Ethical Behavior Paper

Topics: Ponzi scheme, Bernard Madoff, Ethics Pages: 5 (1028 words) Published: April 16, 2015


Analyzing Ethical Behavior
Alia Coleman
Grand Canyon University: BUS 340-T500A
October 27, 2013

Introduction
In the business world, there are certain codes, rules, and regulations each business company or organization must abide by. Without these laws, businesses would be faced with more conflicts and complications than they already do. Large organizations have taken up certain codes to help pilot and supervise their employees and executives in attempts to avoid fraudulence. These codes are called ethics codes, or codes of conduct. Ethics codes are created to help maintain a satisfactory level of ethical behavior within a business or organization and to help companies function more successfully (Mallor, Barnes, Bowers, & Langvardt, 2013, p. 101). Codes of ethics are broken numerous amounts of times in the business world. When these codes are broken, it can lead to multiple complications and scandals for corporations. Two examples of scandal and fraud in the business world are Bernard Lawrence Madoff and ENRON. Bernie Madoff Analysis

Bernard Lawrence Madoff was the chairman for an investment securities firm that he founded in 1960. He was convicted of fraud in 2008 when he admitted that his business was, in fact, the largest Ponzi scheme in history. Approximately $20 billion of, so-called, investments had dissipated (Kramer & Ward, 2009, p. 27). In the case of Bernie Madoff, there were several investigations and red flags that appeared throughout each investigation. For instance, the fact that Madoff hardly ever encountered a “down” or “slow” month even in inconsistent markets raised quite a few suspicions. During the time of investigation, Bernie Madoff also confessed to operating a pyramid scheme as well as using a particular investment strategy called, “split-strike conversion.” This investment strategy “entails buying and selling different sorts of options to reduce volatility” (“The Madoff affair:,” 2008, para. 7). Bernie Madoff is extremely smart and sneaky in a sense that he manipulated several people into investing in his Ponzi scheme. Madoff took millions of dollars from huge corporations and companies. The fact that Madoff’s company had never truly experienced a downfall should have been a major red flag to those who had invested in the company. Madoff portrayed his Ponzi scheme in a way where people liked what they heard, liked what they saw, and therefore, invested immediately into the company without doing any further research. Madoff is a master manipulator, and his lack of ethics caused people to lose nearly their entire life savings. Although Bernie Madoff may have been the mastermind behind this scheme, he is not the only one to blame. There were multiple people working under Madoff. The code of ethics, or lack thereof, really shows here because if someone working in the company had any knowledge of what was going on in regards to the Ponzi scheme, he or she should have had the courage and honesty to go to someone of higher authority and report what Madoff was doing. If someone had any code of ethics or integrity, he or she should have thought about the lives that Madoff’s Ponzi scheme was affecting, and the illegal activity should have been reported immediately. Due to the lack of a code of ethics, multiple people lost a great amount of money by investing in Madoff’s Ponzi scheme. Bernie Madoff has an incredibly selfish view of ethics and corporate responsibility towards his stakeholders. All that was on his mind at the time of the scheme was getting more money and being wealthy. He didn’t care who he was affecting in a negative way, just as long as he benefitted in the end; which is ironic since he ended up in prison with a 150-year sentence. ENRON Analysis

ENRON Corporation was an energy and services company located in Texas. It went bankrupt in December of 2001 due to a planned accounting fraud. This accounting fraud led to several questions and...

References: Enron scandal at-a-glance. (2002, August 22). Retrieved from http://news.bbc.co.uk/2/hi/business/1780075.stm
Kramer, A. S., & Ward, T. P. (2009). Bernie madoff "made off" with my investment: Evaluating the tax options available for victims of fraudulent investments. Journal of Taxation of Financial Products, 8(2), 27-33. Retrieved from http://ehis.ebscohost.com/eds/pdfviewer/pdfviewer?vid=2&sid=e993067b-58f4-413e-bc75-cc9f2983b868@sessionmgr198&hid=4
The madoff affair: Con of the century. (2008, December 18). The Economist, Retrieved from http://www.economist.com/node/12818310
Mallor, J. P., Barnes, A. J., Bowers, T., & Langvardt, A. W. (2013). Business law: The ethical, global, and e-commerce environment. (15th ed.). New York, New York: McGraw-Hill/Irwin.
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