How To Combat Plaintiffs' Lawyers

State attorneys general and deterring robo-signing

2011-12-04T05:58:00.000-08:00

For more than a year, the attorneys general of all 50 states have been in talks with major banks over fraudulent foreclosure practices that drove millions of Americans from their homes following the bursting of the housing bubble, including so-called robo-signing. Some points of a settlement have been reportedly agreed to, including a $25 billion cost to the banks. Last Thursday, Massachusetts Attorney General Martha Coakley broke ranks and sued the five biggest mortgage servicers , in the first government lawsuit targeting all five for alleged improper foreclosure practices. The Wall Street Journal, December 2, 2011, Markets

In middle of November, Nevada Attorney General Catherine Cortez Masto had a grand jury hand up criminal indictments against two title officers employed by Lender Processing Services Inc. for allegedly directing and supervising a robo-signing scheme, in which documents filed in foreclosure cases were signed without proper legal review. The 606-count indictment alleges that the two title officers, Gary Trafford and Gerri Sheppard, directed employees under their supervision to forge their names on foreclosure documents, then notarize the forged signatures, so that it appeared that the pair actually signed the documents. Lender Processing Services, Inc. was not indicted. The Wall Street Journal, November 16, 2011, U.S. News

Twenty five billion dollars is a lot of money, and if there has been wrongdoing that damaged foreclosed homeowners, it is just for those homeowners to be compensated by those who perpetrated the wrongdoing.

If there has been corporate wrongdoing that caused $25 billion in damages to foreclosed homeowners, that would seem to represent a significant mission failure of ethics and compliance officers at the banks in question. If so, hopefully those ethics and compliance officers will do some post-mortem review of their mission failure.

I think those ethics and compliance officers should think about the effectiveness of $25 billion being paid by the banks, as compared to criminal prosecution of culpable officers and employees who did the wrongful actions, as means to deter corporate wrongdoing.

I believe the Ethics & Compliance Officer Association, the Ethics Resource Center, and other business ethics organizations and advocates should interest themselves in the issue of entity level liability versus officer and employee liability for deterring corporate wrongdoing.

The state attorneys general should also think about this issue. For the time being, the National Association of Attorneys General has indicated that it is not within its purview of that organization to conduct policy research and analysis of the issue for the benefit of its member attorneys general. See this entry.

Business and Professional Ethics Journal

2011-12-03T03:47:00.000-08:00

From: RDShatt@aol.com
To: bpej@depaul.edu
Sent: 12/2/2011 8:42:51 A.M. Central Standard Time
Subj: Follow up to 2009 submission

Dear Sir or Madam,

In 2009 I submitted "Whither the Quest of Business Ethicists?" to the Business and Professional Ethics Journal.

Connected to my article, earlier this year, I initiated this project to investigate the views and analyses that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.

In trying to proceed with my project, I have contacted a variety of persons, including the Business Ethics Quarterly and several recent authors in that journal. You may review my correspondence at these entries in my blog.

I continue interested in publishing my article "Whither the Quest of Business Ethicists?" and in finding collaboration and relevant literature pertaining to my project and also an outlet for publishing an article growing out of my project.

If the Business and Professional Ethics Journal and its staff can provide me any help to locate relevant literature or refer me to a possible collaborator or can encourage me about possible article publication in the journal, I will be very thankful.

Sincerely,

Rob Shattuck

National Association of Attorneys General

2011-12-02T06:24:00.000-08:00

From: RDShatt@aol.com
To: jmcpherson@naag.org
Sent: 9/22/2011 7:03:51 A.M. Central Daylight Time
Subj: Project to investigate diverse perspectives on entity vs. individual liability
Dear Jim,

I have initiated this project to investigate the perspectives, views, analyses, and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.
Parties who have an interest or should have an interest in this topic include lawmakers, judges, regulators, state attorneys general, criminal prosecutors, corporate management, ethics and compliance officers, corporation lawyers, various academics, plaintiffs' lawyers, tort reform organizations, and consumer protection organizations.

I am sending this email to you to inquire whether the National Association of Attorneys General would care to participate in dialogue on the subject of my project.

Our prior email correspondence would suggest that my project is not something that NAAG would be willing to participate in, but I thought I would ask anyway.

Thanks.

Sincerely,

Rob Shattuck

From: jmcpherson@NAAG.ORG
To: RDShatt@aol.com
CC: jhunter@NAAG.ORG, jhunter@NAAG.ORG
Sent: 9/22/2011 9:33:19 A.M. Central Daylight Time
Subj: RE: Project to investigate diverse perspectives on entity vs. individual liability
Thank you for thinking of us but not at this time.

Jim

James E. McPherson

Executive Director

National Association of Attorneys General

2030 M Street, NW

Washington, DC 20036

Phone: 202-326-6260

Cell: 202-701-9115

From: RDShatt@aol.com
To: jmcpherson@NAAG.ORG
Sent: 9/28/2011 7:35:01 A.M. Central Standard Time
Subj: Re: Project to investigate diverse perspectives on entity vs. individual liab...
Thanks for replying, Jim.

I know members of NAAG may have differing views on the subject, and that inhibits the Association. If you are willing to consider it, I would like to suggest that, in your newsletter or other form of periodic communication to members, you could include the following notification information for the members:

NAAG has been contacted about this project (http://robertshattuck.blogspot.com/2011/06/statement-of-project.html) to investigate the perspectives, views, analyses, and information that multiple interested parties (including state attorneys general) have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.. Mr. Shattuck, the propounder of the project, understands that the members of the Association may have differing views about the subject, and the Association is thus not in a position to express views about the subject. The Association, however, wishes to notify its members of the existence of the project, particularly if individual members wish to dialogue about the subject. Please contact Mr. Shattuck by email at rdshatt@aol.com if you are interested.

Just a thought.

Thanks.

Rob

Project for Law & Business Ethics

2011-11-19T01:21:00.000-08:00

From: RDShatt@aol.com
To: Eric.Chaffee@notes.udayton.edu
Sent: 9/21/2011 4:02:21 A.M. Central Daylight Time
Subj: Is this within your law and business ethics project?
Dear Professor Chaffee,

The Project for Law and Business Ethics website says, "The project's mission is to explore the role of law and lawyers in promoting the ethical operation of business entities and preventing ethical breaches before they occur."

I think my article Does the Civil Liability System Undermine Business Ethics? discusses a matter that should qualify for and is worthy of exploration in your law and business ethics project. Would you care to comment?

Thank you.

Rob Shattuck

From: RDShatt@aol.com

To: eric.chaffee@notes.udayton.edu
Sent: 11/10/2011 7:04:20 A.M. Central Standard Time
Subj: Fwd: Is this within your law and business ethics project?
Dear Professor Chaffee,

I am following up on the below email I sent you in September. I continue interested in whether you think this is worthy of exploration in your law and business ethics project.

I have this project of my own to investigate the views and analyses that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing. Could I make my project informally part of your law and business ethics project? Isthere another faculty advisor for the law and business ethics project who you think would be interested in collaborating on my project?

Thank you.

Sincerely,

Rob Shattuck

From: Eric.Chaffee@notes.udayton.edu
To: RDShatt@aol.com
Sent: 11/10/2011 10:15:16 P.M. Central Standard Time
Subj: Re: Fwd: Is this within your law and business ethics project?
Rob,

Thank you for your inquiry. Although your project looks interesting, unfortunately, the Project does not have the resources to collaborate at this point.

Best,

Eric

Eric C. Chaffee
Associate Professor
Chair, Project for Law & Business Ethics
University of Dayton School of Law
300 College Park Dr.
Dayton, OH 45469-2772
937-229-4622

From: RDShatt@aol.com
To: Eric.Chaffee@notes.udayton.edu
CC: beqeditor@uncc.edu, KDarcy@theecoa.org, pat@ethics.org
Sent: 11/12/2011 5:58:52 A.M. Central Standard Time
Subj: Re: Is this within your law and business ethics project?
Thank you very much for replying, Eric.

It's too bad your Project for Law & Business Ethics doesn't have the resources at the moment, because I think my project is dead center in the intersection of law and business ethics that your Project touts.

I have been corresponding with recent Business Ethics Quarterly authors. I think my topic is being overlooked and it has great promise for numerous interesting research questions and also much multi-disciplinary appeal. If you wish to judge about this for yourself, you should look at my email correspondence at the following three links: link1, link2 and link3 . Also, you should look at my article "Whither the Quest of Business Ethicists?" that I tried to get published in Business Ethics Quarterly in 2009 and my correspondence with Professor Weaver regarding the same that is here.

The idea of altering the legal machinery to make individual officers and employees more accountable is extremely challenging. There may be legitimate grounds for not doing so. Corporate management could be adamantly opposed. I think ethics and compliance officers are inhibited from speaking on the subject because of what management may think. (Again, if you would like to judge for yourself, take a look at the many blog posts I have under the label "F1. ECOA" that are here.)

The Ethics Resource Center did a 2010 white paper Ethical Leadership and Executive Compensation: Rewarding Integrity in the C-Suite that argues for some things that may not be viewed entirely favorably by corporate management. I used that white paper and also the ERC's 2010 white paper Too Big To Regulate: Preventing Misconduct in the Private Sector to urge the Ethics Resource Center to extend its work to my topic as well. See this email and this email.

Until I find someone else willing to collaborate with me, please consider that you have a standing offer for my project to be incorporated in your Law & Business Ethics Project and worked on by me on an unpaid basis.

Sincerely,

Rob Shattuck

More Business Ethics Quarterly authors

2011-11-06T00:54:00.000-07:00

To: lackert@kennesaw.edu, bryan.church@mgt.gatech.edu, jason.kuang@mgt.gatech.edu, lqi@agnesscott.edu
CC: beqeditor@uncc.edu
Sent: 11/3/2011 3:52:23 P.M. Central Standard Time
Subj: "Lying"
Dear Professors Ackert, Church, Kuang, and Qi,
I wish to comment on your above article in the Business Ethics Quarterly.
Corporate wrongdoing is a very significant societal problem, and outright lying and other forms of dishonesty predominate in corporate misconduct.
Almost all of such lying and dishonesty are for the purpose of economic gain, and not for other psychological reasons.
If the goal of business ethicists is to lessen corporate wrongdoing, it would seem more relevant to focus on lying and dishonesty that are for the purpose of economic gain and on research and theoy about how to deter that kind of lying and dishonesty. Research about lying for non-economic purposes seems much less important.
Thank you.
Sincerely,
Rob Shattuck

From: RDShatt@aol.com
To: Adam.Bailey@BHSU.edu, strudler@wharton.upenn.edu
CC: beqeditor@uncc.edu
Sent: 11/3/2011 3:53:59 P.M. Central Standard Time
Subj: "Dialogue - The Confucian Critique of Rights-Based Business Ethics"
Dear Professors Bailey and Strudler,
I wish to comment on your above dialogue in the Business Ethics Quarterly.
There seems to be an endless train of highly publicized corporate wrongdoing that is of great societal concern.
I think most of the wrongdoing is unacceptable, selfish seeking of personal economic gain by means of dishonesty, subterfuge and concealment, and putting of self interest ahead of others in conflict of interest situations.
As to rights in the workplace (and elsewhere in the commercial world), and whether particular rights exist or not, and whether they should be recognized by corporations or not, it seems to me that the primary governor of corporate conduct about the same is the law. Corporations have plenty on their plate to understand what all the rights are that the law provides for and to figure out how to conduct their corporate activities in ways that properly recognize those rights. I think it can create muddle and distraction to try to inject into corporate governance ideas and debate about "moral" rights beyond the rights that the law provides for.
In terms of which is of greater societal concern, corporate wrongdoing growing out of self-interested dishonesty, or corporate wrongdoing (independent of dishonesty) of a corporation failing to understand and give proper accord to rights that actors in the commercial world have under the law, I would say the first kind of corporate wrongdoing is of greater concern (mainly because most actors in the commercial world will not knowingly stray from the law except in instances where they are pursuing dishonest practices to achieve wrongful economic gain for themselves).
If the goal of business ethicists is to lessen corporate wrongdoing, it would seem more relevant and important to focus on dishonesty and conflict of interest that are at the root of corporate wrongdoing and on research and theory about how to deter that kind of dishonesty. Theorizing about "moral" rights in the workplace and elsewhere in the commerical world beyond rights provided by the law seems much less relevant.
Thank you.
Sincerely,
Rob Shattuck

From: RDShatt@aol.com
To: BobKolb@mac.com, jmoriar@bgsu.edu
CC: beqeditor@uncc.edu
Sent: 11/3/2011 4:55:37 P.M. Central Daylight Time
Subj: Dialogue - CEO Compensation
Dear Professors Kolb and Moriarity,
I wish to comment on your above dialogue in the Business Ethics Quarterly.
Human nature is patently selfish in great measure, and altruism is frequently absent. This is especially so in the business world, particularly taking into account Adam Smith's enshrinement of the pursuit of self interest as a virtue for achieving a greater good for all.
Religion and philosophy have sought for centuries to teach human beings to be less selfish, and those efforts should not cease.
Pending greater success of religious and philosophical teachings, it seems imperative that society utilize the selfishness of human nature that responds to incentives of things that are selfishly desired and that seeks to avoid punishments, in order to deter undesired conduct.
This includes CEO compensation, and the Ethics Resource Center is to be highly lauded for its white paper Too Big To Regulate: Preventing Misconduct in the Private Sector that argues strongly for alteration of compensation structures in order to prevent misconduct in the private sector such as contributed to the recent financial crisis in the United States.
I believe another area that needs more consideration and research by business ethicists is that of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing. I have initiated this project to investigate the views and analyses that multiple interested parties have on this subject.
If the goal of business ethicists is to lessen corporate wrongdoing in a meaningful way, I am not sure how helpful it is to expend effort debating whether CEO's should refuse to accept compensation higher than what is required for the CEO to be willing to do his or her job. Such effort could be better expended I think, for example, on my project.
Thank you.
Sincerely,
Rob Shattuck

From: RDShatt@aol.com
To: BobKolb@mac.com, jmoriar@bgsu.edu
CC: beqeditor@uncc.edu, pat@ethics.org
Sent: 11/13/2011 7:53:18 A.M. Central Standard Time
Subj: Fwd: Dialogue - CEO Compensation (correction)

Dear Professors Kolb and Moriarity,

In my below November 3 email to you, I incorrectly referred to the Ethics Resource Center's 2010 white paper Too Big To Regulate: Preventing Misconduct in the Private Sector. I was intending to refer to the ERC's 2010 white paper Ethical Leadership and Executive Compensation: Rewarding Integrity in the C-Suite, and the statements I made in my email should be read as referring to the latter white paper.

I should say I used both white papers to urge the Ethics Resource Center to extend its work to my topic as well. See this email and this email.

Thank you.

Sincerely,

Rob Shattuck

From: JMORIARTY@bentley.edu
To: RDShatt@aol.com
Sent: 11/13/2011 12:14:04 P.M. Central Standard Time
Subj: RE: Dialogue - CEO Compensation (correction)

Hi Rob,

Thanks for your interest, and for the link.

Best,

Jeff

From: RDShatt@aol.com
To: JMORIARTY@bentley.edu
Sent: 11/16/2011 4:35:11 A.M. Central Standard Time
Subj: Re: Dialogue - CEO Compensation (correction)

Thank you for replying, Jeff.

Sincerely,

Rob Shattuck

From: Adam.Bailey@bhsu.edu
To: RDShatt@aol.com
Sent: 11/3/2011 8:44:11 P.M. Central Daylight Time
Subj: RE: "Dialogue - The Confucian Critique of Rights-Based Business Ethics"
Hi Rob,
While I can't say I agree with your views, I am grateful for your comments, and I appreciate your concern for the greater good.
Best,
Adam

From: RDShatt@aol.com
To: Adam.Bailey@bhsu.edu
Sent: 11/4/2011 3:17:31 P.M. Central Daylight Time
Subj: Re: "Dialogue - The Confucian Critique of Rights-Based Business Ethics"
You are welcome, Adam, and thank you for replying.
If you haven't found your way to this entry and this entry in my blog, you might be interested in reading those.
Sincerely,
Rob Shattuck

From: RDShatt@aol.com
To: j.l.johnson@uva.nl, kelly.martin@business.colostate.edu, asaini@unlnotes.unl.edu
CC: beqeditor@uncc.edu
Sent: 11/6/2011 8:37:58 A.M. Central Standard Time
Subj: STRATEGIC CULTURE AND CONTEXTUAL FACTORS AS DETERMINANTS OF ANOMIE
Dear Professors Johnson, Martin and Saini,

In the appendix of your above Business Ethics Quarterly article that sets out your study measures, you indicate that anomie was measured by requesting firms to respond by circling the number of whichever of the below was most appropriate:

1. In our firm, there is pressure to meet organizational objectives by any means possible.
2. For the most part at work, there is no right or wrong way to achieve the firm’s goals.
3. At work it is considered okay to play dirty to win.
4. The attitude in our firm is that sometimes it is necessary to lie to others in order to keep their trust.
5. In our firm, the rules can be broken in order to achieve organizational goals.
6. The prevailing attitude in our firm is that “nice guys finish last.”
7. In our firm the feeling is that the ends justify the means.
8. In our firm you have to be willing to break some rules if that is what it takes to get the job done.

I have initiated this project to investigate the views and analyses that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.

I would like to measure the effectiveness of entity level liability compared to officer and employee individual liability for purposes of deterring corporate wrongdoing.

One way I would like to measure that is by asking officers and employees (starting with companies where wrongdoing has allegedly taken place) a number of questions along the lines set forth below. For discussion purposes, let's take two examples of alleged wrongdoing that have received recent publicity, to wit, this at Citigroup and this at Bank of New York Mellon (the "subject examples").

I will need to refine the questions and/or work on format, but this is the gist of questions I would like to ask officers and employees at Citigroup and Bank of New York Mellon:

1. Is your belief that wrongdoing in fact took place in the subject examples?

2. To what extent do you believe that officers and employees who were participants in the wrongdoing were aware at the time that they were participating in wrongdoing?

3. In their deciding to participate in the wrongdoing, to what extent do you believe that officer and employee participants made estimates of the likelihood of the wrongdoing getting exposed?

4. In their deciding to participate in the wrongdoing, to what extent do you believe that officer and employee participants made estimates of the likelihood that they would bear any personal liability for the wrongdoing if it was exposed?

5. To what extent do you believe that officer and employee participants were uncertain at the time about whether wrongdoing was being perpetrated?

6. Is a factor contributing to uncertainty about whether something is a wrongdoing the prevalence of legal settlements that corporations make in which the corporation denies or does not admit that there was any wrongdoing?

7. To what extent do you believe that corporations enter into legal settlements in which there is not in fact any wrongdoing?

8. How much greater deterrent effect, if any, do think would obtain if there was a rule of law that there could be no liability (or legal settlement) of a corporation for wrongdoing unless there was some personal liability (or legal settlement) of officer and employee participants in the wrongdoing?

9. To what extent do you believe that any or all the foregoing matters affect in a negative way officer and employee actions and decisions relative to being ethical? To what extent do you believe there is waste and diversion of economic resources in much litigation that could be better spent in other ways to improve corporate behavior?

Professors, your article deals with, and you have investigated, whether certain culture and contextual factors engender or lessen anomie. I would like to suggest that you might consider whether entity level liability versus officer and employee individual liability is a factor that can engender or lessen anomie.

Thank you.

Sincerely,

Rob Shattuck

From: RDShatt@aol.com
To: jeffery_smith@redlands.edu, w.dubbink@uvt.nl
CC: beqeditor@uncc.edu
Sent: 11/7/2011 8:27:45 A.M. Central Standard Time
Subj: Understanding the Role of Moral Principles in Business Ethics: A Kantian Perspective
Dear Professors Smith and Dubbink,

On page 220 of your above article in the Business Ethics Quarterly, you say, "Judging what one ought to do in a particular case is not a matter of being directed by an external authority, whether a person, government or set of conventions."

I am endeavoring to gauge the extent to which business ethicists such as yourselves acknowledge a relevant role in the study of business ethics for the law and government.

I have been reviewing the past couple years' issues of the Business Ethics Quarterly as an indicator of what is currently in vogue in the study of business ethics and whether my project can garner any interest. I have contacted numerous authors of recent articles (my email correspondence can be found in the main here). Thus far, I would say I have received no indication that my project is viewed as having any merit to be worth pursuing (although no one has said in so many words that they think my project has no merit).

I have not given up yet on my project and am continuing my contacting of business ethicists about it.

If I may, may I ask, "Do think my project has merit worth pursuing in the business ethics field currently?"

Thank you for reading this email.

Sincerely,

Rob Shattuck

From: RDShatt@aol.com
To: meb239@psu.edu, msmitche@uga.edu
CC: beqeditor@uncc.edu
Sent: 11/9/2011 4:30:08 A.M. Central Standard Time
Subj: "Ethical and Unethical Leadership: Exploring New Avenues for Future Research"
Dear Professors Brown and Mitchell,

In your above article in the Business Ethics Quarterly, you articulate this "dark side" of unethical leadership:

The Concept of Unethical Leadership
The standing literature has not described destructive leader behavior as “unethical”;
however, the implication is clear. Unethical behavior involves acts that are illegal
and/or are morally inappropriate to larger society (Jones 1991).1 Dark side research
has uncovered a variety of unethical leader acts. Various terms have evolved in
the literature, such as abusive supervision (Tepper, 2000), supervisor undermining
(Duffy et al., 2002), toxic leadership (Frost, 2004), and tyrannical leadership
(Ashforth, 1994). Research shows these leaders are oppressive, abusive, manipulative, and calculatingly undermining (Tepper, 2007). Their actions are perceived as intentional and harmful, and may be the source of legal action against employers (Tepper, 2007). Therefore, destructive leader behavior is unethical.
Unethical leadership, however, transcends beyond the leaders’ own behavior.
In seeking to accomplish organizational goals, leaders can encourage corrupt and
unethical acts within their organizations. For instance, Clement’s (2006) review of
corporate scandals in Fortune 100 corporations concluded that actions perpetrated
by executives, boards of directors, and government officials were the primary cause
of such transgressions. Leaders foster unethical behavior among followers without
engaging in the behavior themselves and do so by way of rewards, condoning nonconformers,and ignoring unethical acts (Ashforth &Anan d, 2003; Brief, Buttram,
& Dukerich, 2001). For instance, qualitative research shows leaders who reward
short-term results, model aggressive and Machiavellian behavior, do not punish
followers’ wrongdoing, and promote like-minded individuals heighten unethical
behavior within organizations (Sims & Brinkmann, 2002). Indeed, research shows
employees engage in unethical acts to boost organizational performance or help the
organization in some other way (Finney & Lesieur, 1982; Umphress,de Bingham, & Mitchell, 2010; Yeager, 1986). Such embedded practices can insulate leaders from
primary blame, essentially providing them “plausible deniability” (Baker & Faulkner,1993; Braithwaite, 1989). Leaders who engage in, enable, or foster unethical actswithin their organizations do not display ethical leadership (Brown et al., 2005).
Instead, leaders who harness and embed unethical behavior of their followers display
unethical leadership (Pinto, Leana, & Pil, 2008). In sum, we define unethical
leadership as behaviors conducted and decisions made by organizational leaders
that are illegal and/or violate moral standards, and those that impose processes
and structures that promote unethical conduct by followers. We now review the
consequences and influences of unethical leadership.

Your article includes much discussion and elaboration of what has been learned about beneficial outcomes from ethical leadership and negative outcomes from unethical leadership, including significant financial detriments for business and psychological deteriments for employees as a result of unethical leadership. Per your article's title, your article explores further avenues for future research.

It is left somewhat unspoken in your article about a mechanism or mechanisms for increasing the prevalence of ethical leadership and lessening that of unethical leadership. Nor does your article's suggestions for future research seem to encompass finding or developing such a mechanism or mechanisms.

Possibly one mechanism is simply that of education, and that Boards of Directors will be persuaded about the positive outcomes from ethical leadership and will implement programs for identifying, hiring and cultivating ethical CEO's and other high level corporate officers. Possibly CEO's and other high level corporate officers will be themselves similarly persuaded and strive on their own to be or become ethical leaders.

Your article does not discuss whether the law is a mechanism for engendering ethical corporate leadership.

A few years ago, because of developments such as the Federal Sentencing Guidelines for Organizations and the Justice Department's Principles of Federal Prosecution of Business Organizations. some business ethicists were very occupied with dissecting the same and theorizing about how the criminal law could be best applied to corporations and their officers and employees for purposes of deterring corporate wrongdoing.

I cannot tell from your article what your thoughts are about the law as a factor in fostering (or undermining) ethical corporate leadership and whether you take much interest in, say, the foregoing work of business ethicists relative to the criminal law.

For several years I have been endeavoring to put forth argumentation to the effect that certain aspects of the civil law significantly undermine business ethics. See my article Does the Civil Liability System Undermine Business Ethics? More recently I have initiated this project to investigate the views and analyses that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.

Are you interested in the law as a factor in engendering ethical corporate leadership? If not, can you refer me to any academic colleague of yours who you think would be interested in helping me with my project and eventually trying to publish a paper growing out of the same.

Thank you.

Sincerely,

Rob Shattuck

To BEQ authors re Citigroup mortgage fraud settlement

2011-10-30T06:02:00.000-07:00

From: RDShatt@aol.com
To: [Business Ethics Quarterly authors per here]
Sent: 10/28/2011 9:19:20 A.M. Central Daylight Time
Subj: To BEQ authors: re Citigroup mortgage fraud settlement

Dear Professors,

This October 20 Wall Street Journal article on the Citigroup mortgage fraud settlement for $285 million against Citigroup also reports that the SEC has negligence civil charges against a Citigroup employee that it is pursuing. The lawyer for the Citigroup employee is quoted as saying, "He was not responsible for any alleged wrongdoing, he did not control or trade the position, did not prepare the disclosures and did not select the assets," and, "We will vigorously defend this lawsuit."

Here are some arguably compelling questions for business ethicists:

1. If there is wrongdoing for which Citigroup is called on to pay $285 million, shouldn't officers and employees who are responsible for the wrongdoing be held liable to some extent?

2. If responsible officers and employees are not held liable to some extent, is that not a signal to all officers and employees, "Go ahead, put your thinking caps on, and come up with your next idea for making the company money, don't worry too much about whether it is ethical or not, ideally the company will make some good money from it and be able to pay you additional compensation for the year, and no one will be the wiser, of, if your idea does come a cropper and a liability has to be paid, it will come out of the hides of the stockholders and not you, so again don't worry"?

3. If there is wrongdoing by Citigroup, are there legitimate reasons why responsible officers and employees should not be held personally liable?

4. Is it possible that the legal system works so badly that there is fact no wrongdoing but a $285 million payment still gets extracted from Citigroup? If so, and there is no wrongdoing, can that have any adverse effect on attitudes and efforts related to Citigroup and its officers and employees being more ethical?

5. Will a meaningful determination be in fact made of wrongdoing, or not, in this matter, which will provide guidance to other officers and employees of Citigroup and of other banks and corporations, relative to future decisions and actions of such officers and employees?

Rob Shattuck

WSJ: Citigroup mortgage fraud settlement

2011-10-27T02:04:00.000-07:00

OCTOBER 20, 2011

Citigroup to Pay $285 Million to Settle Fraud Charges

By JEAN EAGLESHAM And SUZANNE KAPNER

Wall Street's total price tag on settlements with U.S. securities regulators for allegedly misleading investors about mortgage bonds churned out ahead of the financial crisis surged past $1 billion with a deal by Citigroup Inc. to pay $285 million.
The New York company agreed to the payment to end civil-fraud charges by the Securities and Exchange Commission related to a 2007 deal called Class V Funding III. The SEC claimed Citigroup sold slices of the $1 billion mortgage-bond deal without disclosing to investors that the bank was shorting $500 million of the deal, or betting its assets would lose value.
Several Wall Street firms have settled similar claims by the SEC, which has generally stuck to the strategy used by the agency to get a $550 million settlement last year with Goldman Sachs Group Inc. over a collateralized debt obligation called Abacus 2007-AC1.
And the SEC's investigation of the Wall Street mortgage machine isn't over yet. Lorin Reisner, deputy enforcement director at the SEC, said civil mortgage-related cases against Goldman, J.P. Morgan Chase & Co., Countrywide Financial Corp., New Century Financial Corp. and other companies "read like an index to unlawful conduct in connection with the financial crisis." He added in an email: "Our work in this space is continuing."
As a result of the deal with Citigroup announced Wednesday, the SEC has collected a total of $1.03 billion through mortgage-bond-deal settlements. In addition to Citigroup, the total includes Goldman, J.P. Morgan, Royal Bank of Canada, Wells Fargo & Co. and Credit Suisse Group AG.

The companies neither admitted nor denied wrongdoing.According to the SEC, Citigroup helped to rig the bet on Class V Funding III in its favor by exercising "significant influence" over the selection of $500 million of the assets, according to the agency's civil complaint. The agency said investors were assured that the assets were selected by the deal's collateral manager, a unit of Credit Suisse.The assets in the deal, a CDO, were linked largely to other CDOs that in turn invested in pools of subprime mortgages. The SEC complaint quoted one unnamed, experienced CDO trader outside Citi who described the portfolio as "a collection of "dogs—" and "possibly the best short EVER!"The deal became largely worthless within months of its creation, the SEC said. As a result, about 15 hedge funds, investment managers and other firms that invested in the deal lost hundreds of millions of dollars, while Citigroup made $160 million in fees and trading profits, the SEC said.The biggest loser, with a $500 million stake from guarantees sold on the deal, was insurer Ambac, part of Ambac Financial Group Inc., which collapsed because of its exposure to billions of dollars of mortgage-linked investments that went sour, according to the SEC.The assets that Citigroup helped to select performed "significantly worse" than others in the CDO, according to the SEC's complaint.

Citigroup said Wednesday that it suffered some losses on more than $100 million invested by the company in Class V Funding III, while profiting from its bet against $500 million of the portfolio. Citigroup added that it had "very substantial losses" on investments in other CDOs.
Citigroup said it was pleased to resolve the matter. The SEC also filed civil charges of negligence against Brian Stoker, referred to by the agency as the Citigroup employee primarily responsible for structuring the CDO. The SEC alleged that Mr. Stoker described Class V Funding III as a "prop," or proprietary deal, meaning a trade undertaken for the firm's own account, rather than to benefit its customers.
The SEC complaint quoted from an email Mr. Stoker allegedly sent to his supervisor as the deal was being discussed in November 2006, writing that Credit Suisse "agreed to terms even though they don't get to pick the assets."
Mr. Stoker's lawyer, Fraser Hunter of law firm Wilmer Hale Cutler Pickering Hale Dorr LLP, said there was "no basis for the SEC to blame" his client for the alleged disclosure failures to investors. "He was not responsible for any alleged wrongdoing, he did not control or trade the position, did not prepare the disclosures and did not select the assets," Mr. Hunter said. "We will vigorously defend this lawsuit."
If it goes to trial, Mr. Hunter's case is due to be heard by U.S. District Judge Jed Rakoff. Judge Rakoff, who also must approve the Citigroup agreement, has previously criticized the SEC's approach to certain enforcement actions.
Credit Suisse agreed to pay a total of $2.5 million to settle civil charges in relation to the CDO. It didn't admit or deny wrongdoing. The Swiss bank doesn't expect to face enforcement action from the SEC in relation to CDOs that it created or marketed, according to a person familiar with the matter. A spokesman for Credit Suisse declined to comment.
The SEC also filed civil-fraud charges against Samir Bhatt, a former Credit Suisse employee. Mr. Bhatt agreed to a six-month suspension from associating with any investment adviser, as part of an agreement to settle the charges. He didn't admit or deny wrongdoing. Mr. Bhatt's lawyer, James Masella of law firm Blank Rome LLP, declined to comment.

WSJ: Bank of New York currency probe

2011-10-26T02:15:00.000-07:00

OCTOBER 12, 2011

Secret Informant Surfaces in BNY Currency Probe

By CARRICK MOLLENKAMP

For a decade, Grant Wilson toiled on a small trading desk at Bank of New York Mellon Corp. in Pittsburgh, buying and selling currencies for the bank's biggest clients.
Mr. Wilson also had another job: For the last two of those years he was a secret whistleblower, assisting currency-trading investigations of BNY Mellon, according to people familiar with the matter.

A secret whistleblower, Grant Wilson, is at the heart of allegations that BNY Mellon overcharged clients on billions of dollars of currency trades.

His input culminated with the filing last week of separate civil lawsuits by the Justice Department in federal court and New York attorney general in state court alleging that BNY Mellon systematically overcharged investors on billions of dollars of currency trades, defrauding or misleading them for a decade.
The suits seek a total of more than $2 billion from the bank. BNY Mellon denies wrongdoing and is fighting the legal actions.
The allegations against BNY Mellon represent one of the broadest enforcement efforts ever against banks that trade in global currencies—one of the world's biggest financial marketplaces. Massive pension funds that oversee hundreds of billions of dollars for teachers, police and firemen and retirees now are questioning whether they got a fair shake on currency transactions that generated profits for the banks.

Earlier: U.S. and New York Sue BNY Mellon

SmartMoney: What the Probe Means for Investors

Until now, Mr. Wilson's identity remained a closely kept secret. His role as a lone whistleblower against BNY Mellon went undetected even as the bank's lawyers looked for a whistleblower.

The Justice Department and New York's attorney general filed separate civil lawsuits against Bank of New York Mellon Corp. alleging that the bank fraudulently charged clients for currency transactions, David Reilly reports on Markets Hub. Photo: Getty Images.

He left the bank this year after providing information and documents that helped the government and a whistleblower legal group. To pull off two years of secrecy, he and his legal team used a shell partnership in Delaware, met on a Saturday so Mr. Wilson wouldn't be missed at the office, and talked strategy at anonymous restaurants.

Mr. Wilson, along with two lawyers and two other whistleblowers in a separate case, are part of a group that includes Harry Markopolos—the fraud investigator best known for his early, and correct, suspicions that Bernard Madoff's multibillion-dollar investment empire was a fraud. Mr. Markopolos says his group's currency-trading allegations have roots in a hunch he had in 2006 that currency-trading costs might be causing unusual gaps in investment returns.
The group first filed their own lawsuits against the two banks, using information from the whistleblowers, according to people familiar with the matter. State attorneys general then ultimately filed their own lawsuits in four states, believing the whistleblower claims had merit. The whistleblower group can seek a share of as much as 25% of any recovery the states obtain in many of the cases.
State attorneys general in Virginia, Florida and New York and the Justice Department allege BNY Mellon overcharged major clients by giving them unfavorable currency-exchange rates. The alleged fraud involved banking clients that don't negotiate currency trades themselves, but instead give "standing instruction" to a bank to trade for them. These clients usually aren't trading currencies for profit, but simply need foreign money to do transactions overseas.
Mr. Wilson described to his lawyers, and later, law-enforcement officials, how the alleged scheme worked at BNY Mellon and provided internal documents showing the bank's profits. The Wall Street Journal pieced together this account of his role from court documents and extensive interviews with bankers, lawyers and people familiar with the government inquiries.
Mr. Wilson, 52 years old, declined to comment.
In a related case, state prosecutors in California have sued rival State Street Corp., accusing it of improperly pricing currency trades. The Securities and Exchange Commission also is investigating State Street, according to a regulatory filing. State Street strongly denies the allegations.
BNY Mellon sought to discover the insider's identity and to fight the lawsuits. The 225-year-old bank also set up a website to answer client questions and last week ran full-page advertisements in major newspapers saying the claims against it "are flat out wrong and we will fight them in court."
A BNY Mellon spokesman rejected the notion the bank provided "least favorable" currency rates to clients. "We provide competitive wholesale pricing for retail-sized transactions," he said, adding "our clients and their investment managers have full discretion to execute foreign-exchange trades through us or any other provider."

From the Archive

BNY Mellon Forex Trades Cost Pensions (09/14/2011)
Florida, Virginia Sue BNY Mellon (08/15/2011)
California Union Sues BNY Mellon Over Currency Trades (07/26/2011)
Inside a Battle Over Forex (05/23/2011)
Trading Dispute Divides BNY, Fund (03/11/2011)
Suit Alleges Mellon Created Fake Trades, Overcharged (02/04/2011)

Mr. Wilson, an expert in trading Japanese yen, worked on a BNY Mellon trading desk in Pittsburgh, some 375 miles from the bank's headquarters at One Wall Street in New York. On that desk, the whistleblower—identified by people familiar with the situation as Mr. Wilson—"had extensive personal contact with the employees and executives" behind the alleged fraud, according to the Virginia attorney general's complaint.
According to the Virginia and Florida attorney general suits, a separate "transaction desk" was responsible for collecting the currency trades made for the bank's "standing instruction" clients and then setting the price at which the bank would record those transactions. The prices often were at or near the day's least favorable exchange rates, state attorneys general and prosecutors allege, with the bank profiting from the difference.
State attorneys general allege that emails and internal communications from BNY Mellon show executives endorsing the alleged currency-transaction practice, favoring certain clients with better pricing, and worrying that profit margins would fall if the bank were more transparent. The ability of bank clients to monitor transactions more closely would "reduce margins dramatically," according to an email in Virginia's lawsuit, filed in August in state court.
As the BNY Mellon currency-trading investigations grew, Mr. Wilson's colleagues in the office wondered who the whistleblower might be, according to people familiar with the situation. Mr. Wilson's lawyers gave him language to use if he were ever questioned: He was to refer to himself as a "relator"—a whistleblower, in legal parlance—and say, "I'm pursuing a false-claims case against this company." The explicit language was designed to give Mr. Wilson legal recourse if the company were to retaliate against him for being a whistleblower, these people say.
The investigations focus on an opaque area of the foreign-exchange business, where $4 trillion is traded daily. BNY Mellon and State Street are two of the world's largest "custody" banks, which specialize in processing trades and handling administrative tasks for global money managers including pension funds, corporations, universities and other banks.
Mr. Wilson's decision to become a whistleblower started with Mr. Markopolos, the fraud investigator, who had the 2006 hunch about currency-transaction costs. Over the past four years, he and his legal team contacted Mr. Wilson and two former State Street employees, Peter Cera and Ryan Gagne, to secretly help build cases against the two banks. The whistleblower group is led by two lawyers, Michael Lesser in Boston and Philip Michael in New York.
Working with the legal team, Mr. Markopolos arranged clandestine meetings with the whistleblowers at a shopping center and hotel restaurants. The secrecy paid off. Messrs. Cera and Gagne's names have remained confidential until now. The two former State Street employees declined to comment.
The group organized Delaware partnerships, with the three whistleblowers as the partners, in order to keep their identities out of public view. Messrs. Lesser and Michael are the lawyers for the partnerships. Mr. Markopolos works as a litigation consultant to the lawyers.
The reconstruction of the whistleblower group's formation is based on court documents, obituaries, real-estate records, currency-trading industry materials and the accounts of 10 people familiar with the situation.
Mr. Markopolos's hunch came from a book by Yale University's chief investment officer, in which a description of currency transactions stuck out: "Foreign exchange translations may influence returns in a substantial, unpredictable manner." Mr. Markopolos also noticed that pension funds using outside money managers reported slightly lower returns than the money managers themselves.
He asked a friend who had worked at State Street, who told him that custody banks typically charge pension funds unfavorable foreign-exchange, or FX, prices. The friend told Mr. Markopolos, "No one ever checks FX."
He strategized about how to find bank insiders who could help him look into his suspicions. A key tactic: Looking for traders who might be sympathetic, then cold-calling them and saying, "I have a better job for you."
Working from a small home office in Whitman, Mass., he began to try to contact whistleblowers, including Mr. Cera whom he knew through the Boston securities and banking community. A former senior currency researcher at State Street, he told Mr. Markopolos that allegedly improper currency trading was one reason he had left State Street.

“Mr. Wilson's role went undetected even as the bank's lawyers looked for a whistleblower.”

Mr. Markopolos asked Mr. Cera for another State Street insider. He suggested Mr. Gagne. By this time, Mr. Gagne also had left State Street, where he was a currency salesman and worked with the bank's computer systems. Mr. Gagne eventually agreed to join.
In April 2008, the whistleblower team, using information from Messrs. Cera and Gagne, filed a sealed lawsuit against State Street on behalf of two major pension funds, California State Teachers' Retirement System and the California Public Employees' Retirement System, or Calpers.
The suit was filed by an anonymous Delaware partnership called Associates Against FX Insider Trading. It alleges State Street charged the two California funds unfavorable currency rates, determining the prices between 4 p.m. and 5 p.m. each day so the bank could take advantage of daily price fluctuations. The complaint says State Street referred to public pension funds as "dumb" clients compared with "smart" clients who negotiated currency trades to get a better rate.
In a statement, a State Street spokesman said, "Neither Mr. Cera nor Mr. Gagne's job responsibilities included managing or executing indirect FX transactions." She said Mr. Cera left in 2001 and Mr. Gagne left in 2004, well before the 2008 complaint filed in California. She said the bank offers "clients and their investment managers a range of FX execution options and transparency as to our pricing methods" and that the bank will defend against the California allegations.
Meantime, Mr. Markopolos and the legal team contacted Mr. Wilson. Both Messrs. Cera and Wilson had worked at State Street.
On Sept. 12, 2009, Mr. Wilson met with the two lawyers, Messrs. Lesser and Michael, in Boston on a Saturday at Mr. Lesser's firm, Thornton & Naumes. Mr. Wilson didn't take much time away from work and didn't want to raise any suspicions by being out, according to people familiar with the situation.
Mr. Wilson and the lawyers discussed what was at stake during a three-hour meeting. Mr. Wilson claimed that all the standing-instruction trades were made at the same time in the afternoon, according to court documents.
In fall 2009, California's then-attorney general, Jerry Brown, sued State Street in Sacramento state court. In a news release, Mr. Brown cited the whistleblowers's earlier suit and alleged that the bank had charged the state's pension fund at or near the "highest rate of the day." The state estimated that damages and penalties could exceed $200 million.
The State Street lawsuit in California quickly caused headaches over at BNY Mellon. An internal BNY Mellon monthly business report in November 2009 said, "The fallout from the State of California vs. State Street lawsuit continues. To date BNYM has received 42 queries from clients questioning our policies and procedures."
In late October, the whistleblower group finalized suits against BNY Mellon in several states. The group filed papers to form a Delaware general partnership called "FX Analytics" to provide anonymity for Mr. Wilson. They soon filed suits in Virginia, Florida, New York and several other states, according to people familiar with the matter, all of which remain under seal.
The Virginia and Florida filings alleged that BNY Mellon cherry-picked the least-favorable rates for pension funds. Using the whistleblower's information, the suit listed specific amounts of standing-instruction trades—$5.375 billion—that had been processed through a Pittsburgh desk in July 2009. The lawsuits referred to a "relator" who "possesses extensive knowledge and experience regarding (BNY Mellon's) bank offices, businesses and personnel, including personal contact with the employees and executives of BNY Mellon ... who have committed the alleged violations."
The whistleblower suits remained a secret until earlier this year. In January 2011, Virginia Attorney General Kenneth Cuccinelli II intervened and took control of the suit against BNY Mellon in a move that unsealed the 2009 FX Analytics complaint. Florida Attorney General Pamela Jo Bondi did the same.

Those moves were the first public indication that someone inside BNY Mellon was aiding litigation against the bank. Inside BNY Mellon, Mr. Wilson feared his role would be revealed. Friends and colleagues openly discussed who the insider might be.

However, Mr. Wilson was never confronted. Earlier this year he told his boss he was retiring. He moved from Pittsburgh to New England in July.
On Aug. 11, Virginia's Mr. Cuccinelli sued BNY Mellon, alleging the bank had given a fake currency-transaction price to Virginia funds on more than 73,000 trades. The complaint said the "relator" was "employed in the FX trading department at (BNY Mellon) in Pittsburgh" and that "the relator observed (BNY Mellon's) FX trading for its custodial clients and learned directly that the FX scheme described herein was orchestrated and demanded by the senior executive staff of the Bank."
Last week, New York's attorney general intervened and filed its own suit, and the Manhattan U.S. attorney's office also filed suit. Both lawsuits kept secret the role Mr. Wilson played.
Write to Carrick Mollenkamp at carrick.mollenkamp@wsj.com

Emails to Business Ethics Quarterly authors

2011-10-21T06:06:00.000-07:00

From: RDShatt@aol.com
To: Sean.hannah@usma.edu, bavolio@u.washington.edu, Fred.Walumbwa@asu.edu
Sent: 10/1/2011 12:41:10 P.M. Central Daylight Time

Subj: "Relationships between Authentic Leadership, Moral Courage, Ethical and Pro-Social Behaviors"

Dear Col. Hannah and Professors Avolio and Walumbwa,

My project has been undertaken following my unsuccessful effort to get my article "Whither the Quest of Business Ethicists?" published in Business Ethics Quarterly in 2009. See my correspondence with Professor Weaver here.

While I appreciate that your above referenced article concerns an "internally oriented approach" to engendering ethical behavior, as opposed to an "external sanctions oriented approach," I am contacting you to inquire whether you could refer me to any academic colleague of yours who you think would be interested in helping me with my project and eventually trying to publish a paper growing out of the same.

Thank you for your attention to this email.

Sincerely,

Rob Shattuck

From: Sean.Hannah@usma.edu
To: RDShatt@aol.com, bavolio@u.washington.edu, Fred.Walumbwa@asu.edu
Sent: 10/1/2011 3:05:05 P.M. Central Daylight Time
Subj: Re: "Relationships between Authentic Leadership, Moral Courage, Ethical and

Rob, I know of nobody working on civil law liability. There is plenty of literature on ethical climates and ethic cultures that take a transactional/punitive stance or focuses on codes and policies in the organizational behavior literature that a quick search will produce. The corporate social responsibility (CSR) lit also has some discussion of laws and regulations that may be of use.
Cheers, Sean
COL Sean T Hannah, PhD.
Director, Center for the
Army Profession and Ethic

From: bavolio@uw.edu
To: Sean.Hannah@usma.edu, RDShatt@aol.com, Fred.Walumbwa@asu.edu
Sent: 10/1/2011 3:10:26 P.M. Central Daylight Time
Subj: RE: "Relationships between Authentic Leadership, Moral Courage, Ethical and

Rob

I would say the same, but I am not familiar with the literature on civil law liability.

Bruce

From: RDShatt@aol.com
To: msh@rouenbs.fr, tom_lawrence@sfu.ca
Sent: 10/6/2011 4:18:55 A.M. Central Daylight Time

Subj: UNDERSTANDING WIDESPREAD MISCONDUCT IN ORGANIZATIONS: AN INSTITUTIONAL THEORY OF MORAL COLLAPSE"

Dear Professors Shadnam and Lawrence,

In your article's section "Implications of Arguments about Regulation", you say:

In our model, a second set of conditions associated with moral collapse are those that lead to breakdowns in regulation. These are conditions that involve failures to adequately support morally charged institutions with social controls that enforce compliance. We argued that breakdowns in regulation are more likely when the social and economic costs of accusing individuals of misconduct accrue significantly to the organization or the moral community within which it operates, and when the working conditions of organizational members diminish the costs to members of expulsion and/or reduce the effectiveness of organizational surveillance.

My project is greatly concerned with whether "economic costs . . . accrue" to the organization or to individuals; however, I am not clear about the extent to which the regulation you are talking about is intra-organizational versus extra-organizational regulation, and the importance you attribute to whether extra-organizational regulation (i.e., regulation imposed by government and the law) imposes cost on the organization or on the individual. (As the above link to my project indicates, it seems that the Obama administration believes more cost should be imposed on responsible officers and employees.)

Would you care to elaborate for my benefit where extra-organizational regulation fits into your thinking?

Thank you for your attention to this email.

Sincerely,

Rob Shattuck

From: RDShatt@aol.com
To: hasnasj@georgetown.edu, rprentice@mail.utexas.edu, strudler@wharton.upenn.edu
Sent: 10/10/2011 8:34:41 A.M. Central Daylight Time
Subj: "New Directions in Legal Scholarship"

Dear Professors Hasnas, Prentice and Strudler,

I am endeavoring to determine what the current state of research is on the question of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing. I have not found the full text of your above 2010 forum paper and have seen only the synopsis on the Business Ethics Quarterly website. If you can lend me any help in tracking down relevant literature on the above subject, I would be very appreciative.

Thank you for your attention to this email.

Sincerely,

Rob Shattuck

From: RDShatt@aol.com
To: elms@american.edu, Stephen.Brammer@wbs.ac.uk, harrisj@darden.virginia.edu, rphilli3@richmond.edu
Sent: 10/10/2011 8:58:43 A.M. Central Daylight Time
Subj: "New Directions in Strategic Management and Business Ethics"

Dear Professors Elms, Brammer, Harris and Phillips,

I have not found the full text of your above 2010 forum paper and have seen only the synopsis on the Business Ethics Quarterly website. Officer and employee individual liability as a means to deter corporate wrongdoing (and improve business ethics) is something that would seem to have a consequence for "strategic management".

Would you care to provide me the benefit of your thoughts on this?

Thank you for your attention to this email.

Sincerely,

Rob Shattuck

From: RDShatt@aol.com
To: BEQeditor@uncc.edu, audi.1@nd.edu, mzwolinski@SanDiego.edu
Sent: 10/21/2011 7:55:17 A.M. Central Daylight Time
Subj: "Recent Work in Ethical Theory and Its Implications for Business Ethics"

Dear Professors Arnold, Audi, and Zwolinski,

Your above article starts out by saying, "Business ethics as an academic discipline originated in the mid-1970's in response to ethical lapses in the practice of business." The article then proceeds to discuss modes of ethical theorizing that have the goal of determining, or assisting in determining, what actions are right or wrong in the business world. This is presumably with the aspiration that the same will be employed in some fashion and result in improving business conduct.

In simple terms, human nature is selfish in great measure, and altruism is frequently absent. This is especially so in the business world, particularly taking into account Adam Smith's enshrinement of the pursuit of self interest as a virtue for achieving a greater good for all.

Selfishness can harm others, and mankind, for many centuries, has endeavored to mitigate human selfishness, including through religious and philosophical teachings, and also by means of law and punishments.

I would submit that most of the "ethical lapses in the practice of business" that the first sentence of your article refers to involve easily discernable manifestations of human selfishness that society is in agreement should be mitigated, and that these "ethical lapses" do not require much "ethical theorizing" for identifying the lapse and what the "ethical" action or decision is that society desires. I would say these "ethical lapses" can be identified by the presence of dishonesty, conflicts of interest in which self-interest is put ahead of obligations owing to other parties, and/or improper concealments.

The different modes of "ethical theorizing" that your article describes are not, in my view, needed for purposes of determining or identifying these "ethical lapses" in the business world.

Such modes of ethical theorizing, I think, are more aptly directed towards lawmakers regarding the laws they enact for society (and towards citizens to help them decide who their lawmakers should be and the laws that should be enacted, and possibly even for their personal lives), rather than towards the business world.

Take, for example, your article's lengthy discussion of rights. Isn't it primarily a function of government and the law to define what rights exist or don't exist? Are you saying that business ethicists who are propounding their various modes of ethical theorizing as regards rights should endeavor to persuade actors in the business world to give recognition to rights that government and the law, through the political system, have chosen not to recognize?

I would say similarly about the environment and climate change that you discuss in your article. Those, I believe, are primarily in the domain of government and lawmakers to address and make societal decisions about in the form of laws, and then actors in the business world need to obey those laws.

I would recast the matter and say I think that business ethicists should believe that they have largely accomplished their goals if actors in the business world would merely obey the law, with the law spelling out prohibitions and limitations related to dishonesty, dishonest business practices, conflicts of interest, putting self interest ahead of obligations to others, and disclosure and transparency, as well as spelling out "rights" that exist and embodying societal decisions about such things as the environment and climate change. So long as the actors in the business world follow the law, their selfish pursuit of their self-interests should not be considered much of a problem for business ethicists.

From the foregoing it would then follow that a prime concern, if not the prime concern, of business ethicists should be, "How do we get actors in the business world to obey the law?"

Whether you agree with that as a prime concern or not, the answer to the question, in my view, needs to be rooted in using the selfishness of human nature that will respond to incentives of things that are selfishly desired and the selfish avoidance of punishments. That is not to abandon the use of religious and philosophical teachings to try to influence human beings to be less selfish in their decisions and actions, and those should be continued. Business ethicists can divide as to which branch they wish to dedicate themselves to (i.e., the branch of selfish incentives and punishments to obtain the desired business conduct, versus the branch of purveying religious, philosophical and ethical teachings to mitigate human selfishness), and all business ethicists should be supportive of continued efforts on both branches.

My greater interest lies in the first of the two branches. More particularly, I have initiated this project to investigate the perspectives, views, analyses, and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.
Parties who have an interest or should have an interest in this topic include lawmakers, judges, regulators, state attorneys general, criminal prosecutors, corporate management, ethics and compliance officers, corporation lawyers, various academics, plaintiffs' lawyers, tort reform organizations, and consumer protection organizations.
My project has been undertaken following my unsuccessful effort to get my article "Whither the Quest of Business Ethicists?" published in Business Ethics Quarterly in 2009. See my correspondence with Professor Weaver here.

Your article is concerned with the second branch of endeavoring to use religious, philosophical and ethical theorizing and teaching to mitigate human selfishness.

In terms of the "ethical lapses in the practice of business" that have engendered "business ethics as an academic discipline," I would be interested in your citing some lapses that you think are in need of the ethical theorizing your article discusses, as opposed to being subjected to my assertion that what is mainly needed is for actors in the business world to obey the law.

Second, if you think my project is meritorious, I would be very appreciative of your citing me any literature in the business ethics field that you would recommend that I read relative to my project.

Thank you.

Sincerely,

Rob Shattuck

From: DenisArnold@uncc.edu
To: RDShatt@aol.com, audi.1@nd.edu, mzwolinski@SanDiego.edu
Sent: 10/21/2011 9:00:44 A.M. Central Daylight Time
Subj: Re: "Recent Work in Ethical Theory and Its Implications for Business Ethics"

Dear Rob,

Thank you for your message and for reading our contribution to BEQ. The first thing I would note is that the three of us (the co-authors of the article) do not agree on which aspects of ethical theory are most relevant to business ethics. The article is pluralistic in that it presents a range of perspectives that scholars might draw from in advancing business ethics scholarship. Second, as you may be aware, the massive literature in organizational ethics utilizes ethical concepts such as justice, fairness, care, compassion, and integrity, and many organizational ethics scholars have pointed out that the use of those concepts must be grounded in philosophical or theological justification for them to have meaning. Third, you may have noticed in studying business organizations that many companies explicitly identify specific ethical values or principles in their mission statements. For example, over 5,000 companies have committed to adhere to the UN Global Compact which includes respect for human rights as a basic requirement. More recently the UN, after extensive consultation with the business and NGO communities, has promulgated a tripartite framework on business and human rights endorses by many companies and industry groups (see the forthcoming issue of BEQ for six articles on this subject). This framework explicitly identifies the human right responsibilities of business. Various self-regulatory initiatives in different industries also utilize ethical concepts and principles. Fourth, as you no doubt are aware, Smith's account of selfish behavior in the Wealth of Nations was supplemented by a rich discussion of altruism and virtue in The Theory of Moral Sentiments. The contemporary psychology literature includes rich discussion of human motivation and altruism. One of the more important works on this subject that you may wish to consult is CD Batson's Altruism in Humans. Of course, organization culture can greatly shape which human dispositions and values are acted upon in organizations so the study of ethical organizational culture has become quite important for business ethics scholars.

None of this is to suggest that public policy is not important and that ethical considerations are not essential to policy debates and policy implementation. I would think nearly all business ethicists would agree with that judgment. In general, for discussion of these issues, I would recommend to you the rich literature published in Business Ethics Quarterly as well as the Oxford Handbook of Business Ethics edited by Beauchamp and Brenkert. Good luck with your own research.

Kind Regards,

Denis

---------------------------------------------------------------------------
Denis G. Arnold, Ph.D. |Associate Professor of Management

Surtman Distinguished Scholar in Business Ethics
University of North Carolina, Charlotte

9201 University City Blvd. | Charlotte, NC 28223
Phone: 704-687-7703 begin_of_the_skype_highlighting 704-687-7703 end_of_the_skype_highlighting | Fax: 704-687-3123
http://belkcollege.uncc.edu/directory/denis-g-arnold

Editor in Chief, Business Ethics Quarterly

President, Society for Business Ethics

From: RDShatt@aol.com
To: DenisArnold@uncc.edu
CC: audi.1@nd.edu, mzwolinski@sandiego.edu
Sent: 10/22/2011 8:20:02 A.M. Central Daylight Time
Subj: Re: "Recent Work in Ethical Theory and Its Implications for Business Ethics"

Dear Professor Arnold,

Thank you very much for replying to me. I desire more replies to my email correspondence than I get, and I am very appreciative that you responded to me.

My greatest familiarity is with the unending train of well publicized corporate scandals, wrongdoing, misconduct and other ethical lapses (continuing to the present time) that the first sentence of your article alludes to, and also with the many unethical business practices on a smaller scale that one encounters or becomes aware of in the ordinary course of life.

I am gaining familiarity with the CSR movement, organizational ethics, corporate mission statements, and psychological research about motivation and decision making in the business world. I do not have a basis for an opinion about the extent to which the same are contributing to lessening, or will contribute to lessening, the aforesaid train of publicized corporate wrongdoing and unethical business practices on the smaller scale.

Regarding the importance and relevance of the law and punishments for lessening corporate wrongdoing, and more particularly related to my project, we know that, following the financial accounting scandals that came to light in the first half of the last decade (in which the law was broken by someone), the response of Congress was to pass Sarbanes-Oxley to try to achieve greater deterrence by increasing personal liability of CEO's and CFO's. Also, as the statement of my project indicates, the Obama administration has recently taken actions that may be a shift to more individual officer and employee liability, in order to try to deter corporate wrongdoing.

I sent you my email as a result of looking at the BEQ's tables of contents, starting with the current issue and working backwards, to see what articles there were related to my area of interest. I am continuing with that and other avenues to find try to find relevant literature.

I submitted "Whither the Quest of Business Ethicists?" to BEQ in 2009. I continue to think it is meritorious of consideration by business ethicists, and I have not found any comparable literature.

I will continue to try to propound this topic to other business ethicists.

Thank you.

Sincerely,

Rob Shattuck

From: RDShatt@aol.com
To: brenkg@msb.edu
CC: DenisArnold@uncc.edu, audi.1@nd.edu, mzwolinski@sandiego.edu
Sent: 10/23/2011 5:50:58 A.M. Central Daylight Time
Subj: "The Limits and Prospects of Business Ethics"

Dear Professor Brenkert,

I have not been able to find the full text of your above article and have read only the synopsis that appears when I place my cursor over the article title that appears on this webpage. I particularly noted the sentence in that synopsis that says, "Even if business ethicists can rationally defend what businesses should be doing, unless we can relate this to how businesses can come to operate in those ways, our normative arguments will lack power, persuasiveness and effectiveness."

Without the full text of your article, I am not sure what all the things are that "business should be doing" (the goal "of businesses acting ethically" being referred to in the article synopsis), and, more importantly, I don't know what ideas you have for how business "can come to operate in [the desired] ways."

In email correspondence with Professor Denis Arnold concerning his own co-authored article "Recent Work in Ethical Theory and Its Implications for Business Ethics," I argued for the importance of actors in the business world simply obeying the law, and for consideration to be given to more officer and employee individual liability in order to try to achieve greater deterrence of corporate wrongdoing.

For what it may be worth to you, I append below the email correspondence I have had with Professor Arnold. (I did not mention in the correspondence the possible role of whistleblower incentives to deter corporate wrongdoing, which received extensive public comments to the SEC last year, including my own comment.)

Professor Arnold cited to me your Oxford Handbook of Business Ethics. My public library does not have that in its collection, and I will see if I can get it from a local university library.

Thank you.

Sincerely,

Rob Shattuck

From: RDShatt@aol.com
To: DenisArnold@uncc.edu
CC: carrick.mollenkamp@wsj.com, ethics@bnymellon.com, audi.1@nd.edu, mzwolinski@sandiego.edu, brenkg@msb.edu
Sent: 10/26/2011 9:16:27 A.M. Central Daylight Time
Subj: Bank of New York currency trading matter

Dear Professor Arnold,

I don't know if you are willing to continue our conversation, but I thought I would try.

Please consider the current Bank of New York Mellon currency trading story.

Please further consider BNY Mellon's Code of Conduct.

Questions:

If there has been wrongdoing (unethical conduct) in this case, how should it be deterred?

Do you think there will be an adequate societal determination of whether wrongdoing (unethical conduct) has taken place, and, if there is wrongdoing, that there will specificity as to the wrongdoing that may guide the behavior of others to avoid similar wrongdoing?

If there is wrongdoing, do you think individual officers and employees should be held personally liable to some extent for purposes of more effective deterrence?

Do you think any individual officer or employee will in fact be held personally liable?

How do you feel about whistleblowing as a tool for trying to deter corporate wrongdoing?

Do you think there is anything you could learn from the BNY Mellon ethics and compliance department that would be helpful in answering the foregoing questions?

What advice would you give to the BNY Mellon ethics and compliance department? What advice would you give to BNY Mellon management?

My reason for asking these questions is that I could not sense from our prior email correspondence the extent to which you believe business ethicists should be concerned with the law and punishments for lessening corporate wrongdoing.

You said in response to my first email that, "None of this is to suggest that public policy is not important and that ethical considerations are not essential to policy debates and policy implementation. I would think nearly all business ethicists would agree with that judgment." You did not respond to my second email to you, and that left me up in the air about what you think about the role of law and punishments.

If law and punishments have a role, I would be interested in whether there is any new thinking or research going on about the law and punishments. (Obviously I thought "Whither the Quest of Business Ethicists?" was meritorious in 2009 for consideration and still do.)

Any information you can give me, or steer me here, will be most appreciated.

Many thanks.

Sincerely,

Rob Shattuck

Email to Gretchen Morgenson

2011-10-14T02:46:00.000-07:00

Re: Reckless Endangerment and your ECOA talk

Dear Ms. Morgenson,

After sending you my previous email, I read Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon. That email (which you may find at http://robertshattuck.blogspot.com/2011/09/ecoa-featured-speakers.html) was sent in connection with your featured presentation at the Ethics & Compliance Officer Association conference in September and concerned entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.

In Reckless Endangerment and in your Charlie Rose interview
(http://www.charlierose.com/view/interview/11619), you indicate you are greatly bothered by the paucity of individual liability for the likes of Jim Johnson, Franklin Raines, Angelo Mozilo and others, whose "outsized ambition, greed and corruption led to economic armageddon."

I previously informed you that I have initiated this project (http://robertshattuck.blogspot.com/2011/06/statement-of-project.html) to investigate the perspectives, views, analyses, and information that interested parties such as lawmakers, judges, regulators, state attorneys general, criminal prosecutors, corporate management, ethics and compliance officers, various academics, plaintiffs' lawyers, and consumer protection organizations have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.

My impression is that you believe there needs to be more officer and employee individual liability for purposes of trying to deter corporate wrongdoing.

Besides the email I sent to you, I sent individualized emails to many of the other conference speakers for whose topics it seemed to me that the issue of entity level liability versus officer and employee liability had relevance. (You may find those emails at http://robertshattuck.blogspot.com/2011/09/other-ecoa-2011-conference-speakers.html ).

I was not present at the ECOA conference to hear your talk and would be very interested to learn what you said. I hope you said there needed to be more officer and employee individual liability.

Thank you.

Sincerely,
Rob Shattuck

District attorneys; US attorneys

2011-09-28T02:42:00.001-07:00

From: RDShatt@aol.com
To: jbaker@ndaa.org
Sent: 9/22/2011 7:44:59 A.M. Central Daylight Time
Subj: District attorneys and business ethics
Dear Mr. Baker,
I have initiated this project to investigate the perspectives, views, analyses, and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.
Parties who have an interest or should have an interest in this topic include lawmakers, judges, regulators, state attorneys general, criminal prosecutors, corporate management, ethics and compliance officers, corporation lawyers, various academics, plaintiffs' lawyers, tort reform organizations, and consumer protection organizations.
I am sending this email to you to inquire whether the National District Attorneys Association would care to participate in dialogue on the subject of my project or whether you can refer me to any other entity or person who might be an information or policy source that could speak about the subject of my project from the perspective of district attorneys.
Thank you.
Sincerely,
Rob Shattuck

Judges associations

2011-09-28T02:38:00.000-07:00

From: RDShatt@aol.com
To: aja@ncsc.dni.us
Sent: 9/22/2011 7:09:17 A.M. Central Daylight Time
Subj: Judges and business ethics
Dear Sir or Madam,
I have initiated this project to investigate the perspectives, views, analyses, and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.
Parties who have an interest or should have an interest in this topic include lawmakers, judges, regulators, state attorneys general, criminal prosecutors, corporate management, ethics and compliance officers, corporation lawyers, various academics, plaintiffs' lawyers, tort reform organizations, and consumer protection organizations.
I am sending this email to you to inquire whether the American Judges Association would care to participate in dialogue on the subject of my project or whether you can refer me to any other entity or person who might be an information or policy source that could speak about the subject of my project from the perspective of judges.
Thank you.
Sincerely,
Rob Shattuck

National Association of Attorneys General

2011-09-28T02:33:00.000-07:00

From: RDShatt@aol.com
To: jmcpherson@naag.org
Sent: 9/22/2011 7:03:51 A.M. Central Daylight Time
Subj: Project to investigate diverse perspectives on entity vs. individual liability
Dear Jim,
I have initiated this project to investigate the perspectives, views, analyses, and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.
Parties who have an interest or should have an interest in this topic include lawmakers, judges, regulators, state attorneys general, criminal prosecutors, corporate management, ethics and compliance officers, corporation lawyers, various academics, plaintiffs' lawyers, tort reform organizations, and consumer protection organizations.
I am sending this email to you to inquire whether the National Association of Attorneys General would care to participate in dialogue on the subject of my project.
Our prior email correspondence would suggest that my project is not something that NAAG would be willing to participate in, but I thought I would ask anyway.
Thanks.
Sincerely,
Rob Shattuck

National Association of Corporate Directors

2011-09-28T02:26:00.000-07:00

From: RDShatt@aol.com
To: Education@nacdonline.org, Resources@nacdonline.org
Sent: 9/22/2011 4:20:19 A.M. Central Daylight Time
Subj: To NACD: Directors and business ethics

Dear Ms. Gruss and Ms. Meyer,

I am sending this email to you to inquire whether the National Association of Directors would care to participate in dialogue on the subject of my project or whether you can refer me to any other entity or person who might be an information or policy source that could speak about the subject of my project from the perspective of corporate directors.

Thank you.

Rob Shattuck

9/13/11 WSJ article re entity vs. individual level liability

2011-09-25T12:52:00.000-07:00

For ECOA speakers and ethics and compliance contact list

I noticed the below September 13, 2011 Wall Street Journal article reporting further on the Obama administration trying to hold executives personally and criminally responsible for corporate violations of U.S food and drug laws. I continue very interested in what last week's ECOA speakers think about the question of entity level liability versus officer and employee individual liability for deterring corporate wrongdoing. I also hope this was a topic of interest and informal discussion among attendees at the conference last week.

Thanks.

Rob Shattuck

HEALTH INDUSTRY
SEPTEMBER 13, 2011

U.S. Targets Drug Executives

Law Allows Courts to Hold Corporate Officials Responsible for Pharma Violations

By VANESSA O'CONNELL And MICHAEL ROTHFELD

U.S. authorities are stepping up enforcement of a little-used law—the so-called "responsible corporate officer doctrine"—to hold executives personally and criminally responsible for corporate violations of U.S. food and drug laws.
The development has triggered a new wave of worry among defense lawyers representing health-care executives.
Congress authorized criminal sanctions against corporate officers in 1938 under the Food, Drug and Cosmetic Act.
The Supreme Court has since interpreted the law to allow prosecutions without evidence that executives knew a crime was committed—a lower standard than for other industries — because of the potential for health-care and food products to cause death and injury.
The doctrine is the prosecutors' "ticket around the need to prove criminal intent," says Michael W. Peregrine, a lawyer at McDermott Will & Emery LLP. "It puts the pistol to the head of the very senior executives." The government responds that the Justice Department looks for cases where it believes the executives truly bear responsibility for the wrongdoing.
During the 1960s and 1970s, the government used the doctrine in a series of liability cases involving dirty food warehouses. But by the late 1980s, its use had declined.
Earlier this year, however, Marc Hermelin, the former chief executive of a Bridgeton, Mo., pharmaceutical maker, pleaded guilty to two misdemeanor violations of the food and drug laws as a "responsible corporate officer" in a case involving KV Pharmaceutical Co.'s production and distribution of two oversized morphine sulfate tablets.
A judge ordered Mr. Hermelin to pay a $1 million fine, forfeit $900,000 and serve a sentence of less than 30 days in jail. His lawyer, Jeffrey McFadden, of Steptoe & Johnson LLP in Washington, D.C., declined to comment.
Lawyers concerned about the revival of the so-called "corporate-officer responsibility doctrine" cite other recent health-sector cases, including one in Philadelphia involving medical-device maker Synthes Inc. and Norian Corp., a subsidiary.
In 2009, federal prosecutors accused the two companies of running an unauthorized trial of a bone filler in spinal procedures. Three patients died, although prosecutors said they couldn't prove the Synthes product was the cause. The companies pleaded guilty and agreed to pay more than $23 million to settle with the government.
Four Synthes executives were accused of wrongdoing. Acknowledging that they were "responsible corporate officers," the employees each pleaded guilty in federal court to a misdemeanor associated with shipping the misbranded product, Norian XR, across state lines.
The four didn't admit involvement in or knowledge of criminal activity, and no agreement was made on whether the allegations that they intentionally committed crimes could be taken into account in their sentencing.
But prosecutors and defense lawyers are now fighting over what they can introduce in their arguments to the judge about sentencing, which could come as soon as this fall. Under current law, misdemeanor cases carry sentences for company executives of up to a year in prison and a maximum fine of $100,000 per count.
"If the government asks the court to impose jail time in this case, it will have a chilling effect on future 'responsible corporate officer' pleas," said Adam Hoffinger of Morrison & Foerster LLP, lead attorney for Thomas Higgins, a former Synthes division president, who is one of the defendants. The lawyers for the other three defendants declined to comment.
A spokesperson for Synthes, which is headquartered in West Chester, Penn., and listed on the Swiss stock exchange, couldn't be reached for comment. Johnson & Johnson has agreed to acquire Synthes for about $21.3 billion in a transaction that is expected to close early next year.
Prosecutions of "responsible" officers trouble defense lawyers in the health sector because the Department of Health and Human Services, citing Medicare law, has sometimes sought to exclude the convicted executives from future participation in Medicare and Medicaid, which can be a career-ending punishment.
Last December, the U.S. District Court in Washington affirmed a federal health-care program exclusion of three Purdue Frederick Co. executives who had earlier pled guilty to misdemeanor violations of the food and drug laws associated with the misbranding of the drug OxyContin.
The Justice Department didn't allege that the three officers participated in or were even aware of the misbranding, but rather that they were "responsible" corporate officers at the time the conduct occurred.
"The exclusion of these individuals by HHS is unprecedented and unjust," said Andrew Good of Good & Cormier, the lawyer for one of the three executives. The exclusions have been appealed to the D.C. Circuit Court of Appeals, he added.
"You're going after defendants who by definition had no idea they [were] committing a violation," said Robert J. Becerra, a Miami-based lawyer who represented ChemNutra Inc., a Nevada pet-food company, and one of the two executives who pleaded guilty to a misdemeanor and got three years' probation in connection with the import of tainted wheat gluten that killed thousands of dogs and cats.
To be sure, the responsible corporate officer doctrine is just one of several legal tools that the government has used—with mixed success—against health-care executives in recent years.
"There's more focus now on trying to identify whether it's a case where it's appropriate to charge corporate officials with wrongdoing," said John J. Pease, chief of the health-care fraud unit in the U.S. Attorney's Office in Philadelphia, which brought one of the recent prosecutions.
In May, a federal trial judge acquitted a former GlaxoSmithKline PLC lawyer in a high-profile corporate misconduct case, saying prosecutors shouldn't have brought the case.
This year, the U.S. also used another little-used law to try to force the resignation of Forest Laboratories Inc.'s longtime leader even though he wasn't personally accused of any wrongdoing.
But it ultimately dropped its efforts amid protests from the company and major business groups. The agency said it "considered the information provided by [the executive's] attorneys" in its ultimate decision not to exclude him.
Write to Vanessa O'Connell at vanessa.o'connell@wsj.com and Michael Rothfeld at michael.rothfeld@wsj.com

DRI Corporate Counsel Committee

2011-09-17T05:04:00.000-07:00

From: RDShatt@aol.com
To: DRI Corporate Counsel Committee leadership
Sent: 9/17/2011 6:27:58 A.M. Central Daylight Time

Subj: Email to Mr. John Kouris for DRI Corporate Counsel Committee

To DRI Corporate Counsel Committee leadership:

I sent the below email to Mr. John Kouris on Thursday. The cc's on my email were cc's on a 2009 email from Mr. Kouris to me, plus I added Amy Mass.

I hope you will individually review the below email and the referenced project concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.

I have circulated information about the project to corporate ethics and compliance officers and I am particularly trying get the attention of speakers at next week's Ethics & Compliance Officer Association annual conference. (See the emails here and here.)

I hope you, as individual Corporate Counsel, will consider my project worthy of your thinking about and you will dialogue about it with your own corporation's ethics and compliance officers and management.

Thank you.

Sincerely,

Rob Shattuck

From: RDShatt@aol.com
To: johnrkouris@DRI.org
CC: Kelly.Freeman@Meadowbrook.com, larry.henke@trane.com, cehiltgen@hiltgenbrewer.com, cairns@gcglaw.com, hsneath@psmn.com, mmassaron@plunkettcooney.com, ccole@srcattorneys.com, thowes@DRI.org, nparz@DRI.org, lconneen@DRI.org, amass@hanover.com
Sent: 9/15/2011 5:58:25 P.M. Central Daylight Time
Subj: Project to investigate diverse perspectives on entity vs. individual liability

Dear Mr. Kouris,

I previously emailed the DRI Corporate Counsel Committee in 2009, and you thoughtfully provided me with this response.

In June, I initiated this project concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing.

Parties who have an interest or should have an interest in this topic include lawmakers, judges, regulators, state attorneys general, criminal prosecutors, corporate management, ethics and compliance officers, corporation lawyers, various academics, plaintiffs' lawyers, and consumer protection organizations.

If the DRI Corporate Counsel Committee would like to have input into my project, I would very much like to hear from you.

Thank you.

Sincerely,

Rob Shattuck