Wednesday, May 4, 2011

Email to business ethics community

Is Obama administration emphasizing the targeting of individuals?
To the business ethics community:

The article U.S. Effort to Remove Drug CEO Jolts Firms, appearing on the front page of the April 26, 2011 edition of The Wall Street Journal, seems to report a significant development for business ethicists.

The lead sentence of the article says, "A government attempt to oust a longtime drug-company chief executive over his company's marketing violations is raising alarms in that industry and beyond about a potential expansion of federal involvement in the business world."

Further on, the article says: "The campaign against drug-company CEOs is part of a larger Obama administration effort to pursue individual executives blamed for wrongdoing rather than simply punishing companies."

There has been longstanding debate in the ethics community about the question of punishing companies versus punishing responsible officers and employees. I have advocated in favor of more of the latter.

My primary interest has been with how I believe class action and other private civil liability litigation undermines business ethics, because of the way it has been abused by plaintiffs' lawyers to collect lots of money in small amounts from numerous innocent parties (shareholders, other employees, etc.), and how that thereby distracts, and diverts resources away, from holding responsible officers and employees accountable, and results in a failure of deterrence. See Does the Civil Liability System Undermine Business Ethics?

I hope the above development concerning the Obama administration's approach, as reported by The Wall Street Journal, will result in heightened debate in the business ethics community about the question of punishing companies versus punishing culpable officers and employees. I further hope it will result in more consideration given to the aspects of the private civil liability system that I have tried to call attention to that I think undermine business ethics.

Rob Shattuck

P.S. Well, a nice contrapuntal note is this morning's business headline news about a $1 billion mortgage fraud claim by the Justice Department against Deutsche Bank. What, oh what, dear business ethics community, will deter?

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