March 29, 2005

ENRON IS WORKING:

On Wall Street, a Rise in Dismissals Over Ethics (LANDON THOMAS Jr., 3/29/05. NY Times)

Two senior investment bankers at Bank of America were summoned to a meeting this month where their boss, visibly uncomfortable and flanked by bank lawyers, read them a statement. They were both dismissed and asked to leave the building immediately. The decision was final.

Stunned, the bankers asked if they had broken any regulations. No, they were told. Nor had they traded on any inside information. Within the hour, they had turned in their BlackBerrys and laptops and were on their way home to the suburbs.

In the ruthlessly competitive world of investment banking, these two men had been doing what presumably was their job. Acting on a tip from a rival banker, they had called a company preparing to merge with another and asked to get in on the deal. In a different era, such an action might well have been seen as an example of what hungry bankers do to secure an edge with a client and maybe even a better bonus - not an inappropriate use of confidential information and cause for termination.

But with regulatory scrutiny heightened after the collapse of Enron and other companies, corporations and their boards are adopting zero-tolerance policies. Increasingly, they are holding their employees to lofty standards of business and personal behavior. The result is a wave of abrupt firings as corporations move to stop perceived breaches of ethics by their employees that could result in law enforcement action or public relations disasters.


Finally adopting and enforcing standards is hardly lofty.

Posted by Orrin Judd at March 29, 2005 10:03 PM
Comments

Lofty or not, it may be excessive. I don't understand the problem here - they leaked inside information to someone who already knew it, the company itself? If they had traded the stock, or tipped off a competitor, I'd be all for immediate dismissal (and jail). In this case, the person that leaked the information should be dismissed.

But how did these people make inappropriate use of the information they received? Is it merely having heard the information that's a crime, regardless of how they responded?

How is society better off if we ban inside information being told to those who already know it?

Posted by: Ann at March 30, 2005 11:57 AM

Interesting case study for our libertarian friends to ponder. Businesses and markets do not work well unless the people in them act according to transcending moral codes. Enron was the business version of Safe Sex campaigns.

Posted by: Luciferous at March 30, 2005 12:01 PM
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