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SAMPLE

MEL SYLLABUS 2012

WEEKEND INTENSIVE

LEONARD N. STERN SCHOOL OF BUSINESS

NEW YORK UNIVERSITY

PROFESSIONAL RESPONSIBILITY:

MARKETS, ETHICS & LAW (COR2-GB.3101.24)

Winter Term 2012

Dates: February 3-5

Meeting Time: 9am-4pm (9-12, 1-4)

Classroom: KMC 4-120

PROFESSOR Brenner

Office: Tisch 429

Office Hours: Available to meet by appointment

Email: kbrenner@stern.nyu.edu

Teaching Assistant: Isiah Harris; isiah.harris@law.nyu.edu

COURSE OBJECTIVES

The modern world rests on the pillars of the rule of law, the market economy, and civil

society. The purpose of this course is to introduce the student to a broad range of issues

encountered by managers and business professionals in navigating between these pillars

and to help the student develop a set of analytical perspectives for making judgments

when such issues arise. In economics many of these issues can be described as market

failures or imperfections.

Professional challenges arise from perceived conflicts between the requirements of

universally binding norms, the norms applicable to practitioners of particular occupations,

duties to or expectations of oneself and, in some cases, legal imperatives. We will

examine circumstances that give rise to these conflicts and we will also examine the role

of ethical norms and reasoning in resolving such issues in managerial life, and in

establishing standards of professional responsibility.

The student in this course will exercise professional judgment through discussion and

analysis. Most such exercises will require the analysis of one or more cases, as indicated

on the attached schedule of class assignments.

As this topic continues to present new and interesting case material, it is likely that during

the semester we may interrupt our planned syllabus and take time to discuss issues that

are occurring in real time. Students are encouraged to be current with business literature

and to bring some of these cases to class for discussion.

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PROFESSIONAL RESPONSIBILITY COURSE PACK

Required Cases & Readings 2012

All required cases and readings for this course are located in TWO SEPARATE places:

Your Professor’s Blackboard Page (free) AND a Xanedu Course Pack (purchase).

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1. BLACKBOARD

On your professor’s Blackboard page you will find the Professional Responsibility

Cases and Readings 2012 posted under the Course Documents link together with a

Table of Contents. Most of the course readings are free except for a few which need

to be purchased from Xanedu.

2. XANEDU.COM

On Xanedu.com you will find additional required readings for Professional

Responsibility. To access these readings you will need to purchase a Xanedu access code

from the NYU Bookstore.

Placing an Online Order for the Xanedu material:

Go to the NYU Book Store web site: http://www.bookstores.nyu.edu

Click on the "Textbook Inquiry and Ordering" link.

Winter/Spring 2012 ISBN to be supplied.

Proceed to Checkout and complete your order.

After completing your order you will receive an email with your access code and

instructions regarding accessing the digital course pack.

Questions/Problems?

Contact rkowal@stern.nyu.edu

PREPARATION FOR CLASS

Each class session consists of several study modules. Each study module contains

readings and study questions. Your primary obligation in this course is to prepare for

class discussion by thorough reading and analysis of assigned materials before each class.

Case discussions and in-class activities are an essential part of the course. All students are

responsible for being prepared to discuss answers to all of the study questions before

coming to class. The instructor will call on students to provide their answers orally, as a

basis for further discussion, so please be prepared.

GRADING

The weights for the student’s overall grade are:

Class Participation 25%

Homework: Written Study Question Analysis 35%

Term Paper Project 40%

COURSE REQUIREMENTS

1. Attend all 3 scheduled class sessions.

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2. Homework: 3 Written Study Questions (2 - 3 pages each). Pick ONLY ONE

Study Question out of the assigned readings for EACH day of class to

answer.

3. Homework assignments due on BB PRIOR to the class meeting. Upload your

Assignment as WORD files on Blackboard under “Assignments.”

4. Homework papers due prior to class: 2/2 (Thursday PM), 2/4 (Saturday before 9

AM) & 2/5 (Sunday before 9 AM) respectively.

5. Term Paper Description (1 page): Due 2/4 (on BB).

6. Term Paper (8-12 pages): Due 2/12 via EMAIL (see below).

HOMEWORK: WRITTEN STUDY QUESTION ANALYSIS (2 to 3 pages typed &

double spaced)

DUE: As specified above.

Each student should prepare a written analysis of one study question per day. These

analyses should be 2-3 pages in length.

TERM PAPER DESCRIPTION: (1 page typed & double spaced)

DUE: 2/4

A one-page description of your term paper project as outlined in the next section. The

description should not provide any confidential details of the experience that may be

included in the term paper.

TERM PAPER PROJECT: (8-12 pages typed & double spaced)

DUE: 2/12 (One Week after Last Day of Class)

The purpose of this paper is to allow the student to apply principles of professional

responsibility to an actual, specific business situation. The student will describe a

situation with which he or she has first-hand familiarity. The student may have been a

major or minor actor in the situation, or may have merely witnessed the situation. In any

event, the requirements are that the situation raise ethical or legal issues and that the

student was there. It would not be appropriate to analyze a situation if you were not in a

position to observe it directly.

Organize the term paper as follows:

I. Situation

Provide a description of the situation or practice; this description must be detailed and

rich enough to allow the reader to get a clear sense of the issues and circumstances (2-4

pages).

II. Analysis

Apply some method or methods of ethical (or perhaps legal) reasoning to the situation

and examine the results of this application. Are the results logical, beneficial, counter

intuitive, or in any other way problematic? Here the student should apply, wherever

appropriate, concepts from the course discussion and its readings. Also, the student

should cite the relevant law (2-4 pages).

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III. Resolution & Conclusion

Describe how the situation was actually resolved. Discuss this resolution in light of the

ethical analysis from section II (2-4 pages).

Evaluation of Term Paper Project: Good performance (hence good grades) on this

assignment consists of systematically and thoroughly applying relevant concepts and

methods from the course to the situation, and in testing the worth of those concepts and

methods in resolving the ethical issues it presents.

Confidentiality of Term Paper Projects:

The contents of the term paper projects that you submit are held strictly confidential. The

term papers are not read by anyone other than the professor and are not disseminated in

any fashion to other person(s).

Handing In Term Paper:

Since the term papers are due after our class sessions have ended you MUST hand in your

term paper via Email to Professor Brenner (kbrenner@stern.nyu.edu) as a Word file

attachment. Note that the confidentiality of email cannot be guaranteed.

COURSE SCHEDULE TOPICS & ASSIGNMENTS

DAY #1 MORNING 9:00am - 12:00pm

COURSE CONCEPTS, MARKET FAILURES & ETHICAL

THEORIES

READINGS Course Pack

Economic Theories of

Regulation: Normative

vs. Positive”

Linda N. Edwards & Franklin

R. Edwards

Course Concepts

(market failure)(xanedu)

The Price of Lobster

Thermidor

The Economist

http:/www.suboceansafety.

org

Moral Standards Across

Borders

Neutral Omni-Partial

Rule Making

Ronald M. Green Course Concepts

(xanedu)

Making an Ethical

Decision

Terry Halbert & Elaine

Ingulli

Course Concepts

(ethical theories)

STUDY QUESTIONS

1. Why do market failures tend to bring about laws or regulations to counter their effects?

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2. Based on the Edwards article which market failures or imperfections are present in the

“Lobster Thermidor” (The Economist) case? How might the Green reading help to

analyze the case?

3. Based on the Halbert & Ingulli reading (“Making an Ethical Decision”), identify at

least one market failure related to your employment situation and apply the methods of

ethical reasoning to this market failure.

TRUTH & DISCLOSURE

READINGS Course Pack

Bluffing Jim T. Priest Course Concepts

(business bluffing)

Bitter Pill Ralph T. King, Jr Truth & Disclosure

(“Truth”)

When Do Exaggerations &

Misstatements Cross the

Line?

Stewart Friedman,

Knowledge@Wharton.com

Truth

You Have The Only Hard

Copy

Peter Elkind Truth

What the Doctor’s Aren’t

Disclosing

Arlene Weintraub Truth

Doctor’s Paid to Prescribe

Generic Pills

Vanessa Fuhrmans Truth

STUDY QUESTIONS

1. Would a “Bluffer” (Priest) voice any objections to the corporate actions of Boots

described in “Bitter Pill”? Do you agree with Priest? Can you identify any market

failures in “Bitter Pill”?

2. Assess the long-term effects of bluffing as applied to revising a stock ratings system

(“You Have the Only Hard Copy”)?

3. Is there anything ethically wrong about the actions of the medical writers as described

in “What Doctor’s Aren’t Disclosing”? Or, the actions of pharmaceutical companies in

“Doctor’s Paid to Prescribe Generic Pills”? What if most drug companies behaved in

similar ways? Would this make their actions justifiable as business bluffing (Priest) or

considered to be deceptive (“When Do Exaggerations & Misstatements Cross the Line”)?

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GIFTS, SIDE DEALS & CONFLICTS OF INTEREST - FILM

READINGS Course Pack

Bribery & The Foreign

Corrupt Practices Act

http://www.usdoj.gov/crimina

l/fraud/docs/dojdocb.html

Gifts, Side Deals &

Conflicts of Interest

(“Gifts”)

Buynow Stores Bruce Buchanan Gifts

Roger Berg Ronald M. Green Gifts (xanedu)

Wall Street and the

Nursery School

Gretchen Morgenson & Pat

McGeehan

Gifts

UK Bribery Act (focus on

pages 1-6)

Gifts

The Doctor vs. Device

Makers

Arlene Weintraub Gifts

STUDY QUESTIONS

1. Make a list of all the gift practices described in Buynow Stores. In your judgment,

which of these, if any, are inappropriate? Use ethical concepts and methods from the

Green reading to support your position.

2. Do the Roger Berg and Wall Street Nursery School cases differ materially from

Buynow Stores? Use ethical concepts and methods from the Green reading to support

your position.

3.How does the UK Bribery Act differ from the FCPA and what are the potential business

implications?

DAY #1 AFTERNOON 1:00pm - 4:00pm

AGENCY & FIDUCIARY DUTY

READINGS Course Pack

Disloyal Agents David Cavers Agency & Fiduciary Duty

(“Agency”)

Old City Enterprise

Lawrence Zicklin

Agency

A Promise to be Ethical in

an Era of Immorality

Leslie Wayne Agency

The Man Who Paid the

Price for Sizing Up Enron

Richard A. Oppel, Jr. Agency

http:/mbaoath.org/ Agency

At The Center of Fraud,

WorldCom Official Sees

Susan Pulliam Agency

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Life Unravel

Trusted Adviser or Stock

Pusher? Finance Bill May

Not Settle It

Tara Siegel Bemard Agency

Broker? Adviser? And

What’s the Difference?

Paul Sullivan Agency

STUDY QUESTIONS

1. Which fiduciary duties might be at issue in “Old City Enterprises”? Is Ed Stevens

(“Old City”) acting properly in terms of shareholder interests and ethical standards?

2. What is likely to be the long term value of the MBA oath as currently configured?

What changes would you recommend, if any?

3.What may be the implications of a changing fiduciary standard on brokers (“Trusted

Adviser” and “Broker? Adviser?”)?

WHISTLE BLOWING & LOYALTY- FILM

READINGS Course Pack

The Return of Qui Tam Priscilla R. Budeiri Whistle Blowing

Aircraft Brake Scandal Kermit Vandivier Whistle Blowing (xanedu)

Sweeping New

Whistleblower Incentives

and Protections in

Financial Reform Bill

Mike Delikat and Renee

Phillips

http://www.orrick.com/fileupl

oad/2832.htm

Whistle Blowing

Fraud Busting Begins At

Home

Mark Green Whistle Blowing

Airline Safety: A

Whistleblower’s Tale

Stanley Holmes Whistle Blowing

The Salaryman Accuses Martin Fackler Whistle Blowing

Delta Industries Lawrence Zicklin Whistle Blowing

$750MM Fine for Drug

Maker of Tainted Goods

Gardiner Harris and Duff

Wilson

Whistle Blowing

STUDY QUESTIONS

1. Consider the position of Searle Lawson in the “Aircraft Brake Scandal” case. Create a

timeline of events and determine at what point, if any, should he have blown the whistle

to someone outside B.F. Goodrich? Why do you think that the outcome in the “Airline

Safety” case was so different for Mark Lund?

2.What are the potential implications of the new whistleblower incentives? Should

private corporations also utilize whistle blowing and reward employees who blow the

whistle on their colleagues (“Delta Industries”)?

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DAY #2 MORNING 9:00am - 12:00pm

INSIDER TRADING

READINGS Course Pack

What is Insider Trading? http://www.sec.gov/answers/

insider.htm

Insider Trading

Collecting Tidbits, And

Trouble

Andrew Ross Sorkin Insider Trading

Raymond Dirks and Equity

Funding of America

Roy C. Smith Insider Trading

So, What is Insider

Trading? (go to article)

Andrew Ross Sorkin Insider Trading

The Case for Insider

Trading

Henry G. Manne Insider Trading

The Cost of Inequity The Economist Insider Trading

Computers That Trade on

the News

Graham Bowley Insider Trading

STUDY QUESTIONS

1. Why was Dirks reprimanded by the SEC but ultimately exonerated by the Supreme

Court? Use legal and ethical concepts to support your position.

2 .What are the potential implications of recent events, as depicted in “Collecting Tidbits,

And Trouble,” for equity research?

3.Do laws forbidding insider trading make financial markets more or less efficient? Use

ideas from both economics and ethics to justify your position as well as including

Manne’s thesis (”The Case for Insider Trading”) on insider trading.

CONTROL BY LAW

READINGS Course Pack

Living with the

Organizational Sentencing

Guidelines

Jeffrey Kaplan, Linda S.

Dakin, Melinda R. Smolin

Control By Law

Prosecutors’ Tough New

Tactics Turn Firms Against

Employees

Laurie P. Cohen Control By Law

Deals & Consequences London Thomas Jr. Control By Law

Pollution Case Highlights Dean Starkman Control By Law

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Trend to Let Employees

Take the Rap

The Convergence of

Principle and Rule-Based

Ethics Programs

Ronald Berenbeim & Jeffrey

Kaplan

Control By Law

In Justice Shift, Corporate

Deals Replace Trials

Eric Lichtblau Control By Law

U.S. To Ease Pressure

Tactic Over Legal Help for

Employees

Eric Lichtblau Control By Law

Filip Memorandum:

Principles of Federal

Prosecution of Business

Organizations

United States Department of

Justice, August 2008

Control By Law

STUDY QUESTIONS

1. How do you think the U.S. Sentencing Guidelines (“Living with the Organizational

Sentencing Guidelines”) might change corporate behavior? Consider this from the

perspective of the corporation as employer (“Prosecutors’ Tough New Tactics”).

2. Are the compliance costs of the U.S. sentencing guidelines justified? Would an ethics

based approach make implementation of compliance programs more effective (“The

Convergence of Principle and Rule-Based Ethics Programs”)?

3. Do you agree with the current trend towards the deferred prosecution of white-collar

crime (“In Justice Shift”)? Does this comport with the policies of the US Department of

Justice (“The Filip Memorandum” and “US to Ease Pressure Tactic”)?

4. What are the implications of the Corporate Sentencing Guidelines for employees,

corporations and judges (“Deals & Consequences” and “Pollution Case Highlights”)?

BOARD OF DIRECTORS- FILM

READINGS Course Pack

Our Schizophrenic

Conception of the Business

Corporation

William T. Allen Course Concepts

Speedy New Titans of

Trading Makes Waves Far

From Wall Street

Julie Creswell Board of Directors

(“Directors”)

Boeing CEO Resigns Over

Affair With Subordinate

Renae Merle Directors

Crisis of Corporate Ethics Roy C. Smith Directors

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Report of the NYSE

Commission on Corporate

Governance, September

23, 2010 (final CCG

Report) (Focus 1-7, 10-22)

http://www.nyse.com/pdfs/CC

GReport.pdf

Directors

Excerpts from the Report

of a Special Committee

Investigating Enron

New York Times Directors

STUDY QUESTIONS:

1. Evaluate the conduct of each professional in relation to Enron (“Excerpts from the

Report of a Special Committee Investigating Enron”). What were the embedded conflicts

and how could the actions of a board of directors mitigate some, or all, of these

outcomes?

2. The nature of a corporation has been defined by Allen (“Schizophrenic Conception”) –

contrast and compare his definitions of a corporation. Which conception of the business

corporation do you think currently dominates in corporate governance? How should the

current composition of shareholders affect our concept of director’s obligations (“Speedy

New Titans”)?

3.What are the core findings/issues raised by the NYSE Commission on Corporate

Governance (“Report of the NYSE Commission on Corporate Governance”)?

DAY #2 AFTERNOON 1:00pm - 4:00pm

SALES AND MARKETING

READINGS Course Pack

Investment

Management: Business...

Or Profession…

John C. Bogle Sales & Marketing

Commissions on Sales at

Brock Mason

Tom L. Beauchamp Sales & Marketing

(xanedu)

Trading Room Ethics Larry Zicklin Insider Trading

Responsibility Yes, But to

Whom

Lawrence Zicklin Sales & Marketing

Drug Makers Scrutinized

Over Grants

Gardner Harris Sales & Marketing

Novartis Settles Off-Label

Marketing Case Over Six

Drugs for $422.5MM

Duff Wilson Sales & Marketing

Forest, Maker of Celexa to Natasha Singer Sales & Marketing

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Pay More Than $313MM

to Settle Marketing Case

STUDY QUESTIONS

1. In the “Brock Mason” case, Mr. Tithe, the branch manager, describes the situation with

the widow as “unfortunate” but not “unfair.” Do you agree? Use ethical methods and

concepts to justify your position. Is the situation at Brock Mason similar to that in the

“Responsibility Yes, But to Whom” case?

2.What ethical principles/guidelines would you impose on physicians and pharmaceutical

companies and why (“Novartis” and “Forest”)?

3. In his article, “Investment Management: Business . . . or Profession,” John Bogle

implies that much of the mutual fund business is driven by moral hazards and fiduciary

duty problems. Do you agree?

PRODUCT LIABILITY- FILM

READINGS Course Pack

A.H. Robins: Dalkon

Shield

A. R. Gina & Terry Sullivan Product Liability

(xanedu)

A Cash Settlement But No

Apology

Meryl Gordon Product Liability

In Breast Implants Scandal,

Where Was Dow

Corning’s Concern for

Women?

Andrew W. Singer Product Liability

Legal Myths: The

McDonald’s Hot Coffee

Case”

The Public Citizen Product Liability

Repeated Defect in Heart

Devices Exposes a History

of Problems

Barry Meier Product Liability

An Attempt to Revive the

Lost Art of Apology

Alina Tugend Product Liability

STUDY QUESTIONS

1. Should A.H. Robins have introduced the Dalkon Shield when it did (“A.H.Robins”)?

Does Robins have any defenses? What method of ethical reasoning seems most

appropriate to this problem? Create a timeline of events for the case and determine

whether another path should have been chosen, when and why.

2. Was McDonald’s “negligent” for selling “unreasonably dangerous” coffee in the “hot

coffee” case (“McDonald’s Hot Coffee Case”)? Does McDonald’s have any legal

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defenses?

3. In terms of litigating product liability cases (“In Breast Implants Scandal”) are there

moral hazards present in this case or in product liability cases in general?

4.Have any fiduciary duties been breached in the Guidant heart device case (“Repeated

Defect in Heart Devices Exposes a History of Problems”). Can you identify any market

failures? Create a timeline of events and determine what and when other action may have

been taken and why.

DAY #3 MORNING 9:00am - 12:00pm

DISCRIMINATION

READINGS Course Pack

Federal Equal Employment

Opportunity Laws

http://www.eeoc.gov

Discrimination

Foreign Assignment Thomas Dunfee and Diana

Robertson

Discrimination

(xanedu)

Fear of Firing Michael Orey Discrimination

Can Employers Alter

Hiring Practices to Cut

Health Costs?

Ann Zimmerman Discrimination

STUDY QUESTIONS

1. In the “Foreign Assignment” case, how would you judge the actions of Bill

Vitam? Use ethical concepts as well as the law, to justify your position. According to the

EEOC, can the bank (employer) be held liable for sexual harassment created by its

employees? Does the bank have any affirmative defenses according to the Equal

Employment Opportunity Commission (http://www.eeoc.gov)?

2. Is discouraging unhealthy job applicants a form of discrimination (“Can Employers

Alter Hiring Policies to Cut Health Costs?”)? What about avoiding hiring capable

applicants who fall within a “protected class” due to potential litigation costs (“Fear of

Firing”)?

SOCIAL RESPONSIBILITY TO STAKEHOLDERS

READINGS Course Pack

The Social Responsibility

of Business is to Increase

Milton Friedman Social Responsibility

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Its Profits

Restricted Reasons and

Permissible Violation

Arthur Isak Applbaum Course Concepts

A Marriage of Differing

Missions

Stephanie Strom Social Responsibility

Ally for the Poor in an

Unlikely Corner

Donald G. McNeil, Jr. Social Responsibility

The Right Thing: When

Good Ethics Aren’t Good

Business

Jeffrey Seglin Social Responsibility

STUDY QUESTIONS

1. What advice would Friedman (“The Social Responsibility of Business is to Increase

Profits”) and Allen (“Our Schizophrenic Conception”) give to Mr. Witty (“Ally for the

Poor”)? Do you agree with Friedman or Allen? Use ethical methods and concepts of

fiduciary duty to support your position.

2. Did the CEO of Smith & Wesson fulfill his fiduciary duties (“The Right Thing”)?

Justify your position. How would Applbaum (“Restricted Reasons & Permissible

Violation”) judge his behavior?

3.What are the challenges of the different business structures depicted in “A Marriage of

Differing Missions” and how may they be overcome?

DAY #3 AFTERNOON 1:00pm - 4:00pm

MORAL STANDARDS ACROSS BORDERS- FILM

READINGS Course Pack

United States Bill of

Rights

http://www.usinfo.state.gov

Moral Standards

In Praise of Cheap Labor:

Bad Jobs at Bad Wages…

Paul Krugman Moral Standards

Human Rights on the Eve

of the 21st Century

His Holiness the Dalai Lama Moral Standards

Universal Declaration of

Human Rights

http://www.un.org

Moral Standards

Big Tobacco Sets Its

Sights on Africa

Jeffrey Kluger Moral Standards

Lives Held Cheap in

Bangladesh Sweatshops

Barry Bearak Moral Standards

Drug Firms See Poorer

Nations as Sales Cures

Avery Johnson Moral Standards

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Philip Morris’ Global Race Nanette Byrnes and Frederik

Balfour

Moral Standards

UN Guiding Principles for

the implementation of the

United Nations ‘Protect,

Respect and Remedy’

Framework (Focus on

pages 1-4 and 12-20)

John Ruggie Moral Standards

STUDY QUESTIONS

1. Are sweatshops unethical according to Krugman (“In Praise of Cheap Labor”) or the

Dalai Lama?

2. Do human rights exist (“Universal Declaration,” “Dalai Lama” and “UN Guiding

Principles”)? If so, as the CEO of a corporation, how would you apply these ideas to

workers in Bangladesh (“Lives Held Cheap in Bangladesh Sweatshops”) and to the

children who purchase cigarettes in Africa (“Big Tobacco”) and other countries (“Philip

Morris’ Global Race”)?