In recent years one major corporate crime that has captured headline news has been the Martin Shkreli/Turing Pharmaceuticals scandal. Martin Shkreli was CEO of Turing Pharmaceuticals a company that acquired U.S. marketing rights for a drug called Daraprim, a popular drug for AIDS patients. Shkreli amplified the pricing on the drug that has been on the market for decades from $13 to $750 per pill, which is more than a 5,000% increase. Although, these actions made Martin Shkreli infamous amongst Americans, his decision to raise the price of the drugs were perfectly legal. Instead, Shkreli found himself in trouble with regards to the 2 hedge fund companies that he ran, MSMB Capital and MSMB Healthcare. In 2011 while running MSMB Capital Management,
Martha Stewart and Peter Bacanovic were indicted on criminal charges arising from Martha Stewarts December 27, 2001 sale of 3,928 shares of stock in ImClone Systems, Inc. ("ImClone"). ImClone is a biotechnology company whose then-chief executive officer, Samuel Waksal, was a friend of Stewart's and a client of Stewart's stockbroker at Merrill Lynch, defendant Peter Bacanovic. On December 25, 2001, ImClone learned that the Food and Drug Administration had rejected the company's application for approval of Erbitux, a cancer-fighting drug. On December 28, the day after Stewart sold her shares; ImClone publicly announced that the Erbitux application had been rejected. Shortly after ImClone's announcement, the Securities and Exchange Commission "SEC" and the United States Attorney's Office for the Southern District of New York launched investigations into trading in ImClone stock in advance of the announcement to the public of the news about Erbitux.
Federal Trade Commission, 1979. Braithwalte, John. The. Corporate Crime in the Pharmaceutical Industry? Boston, MS: Routledge & Kegan Paul, 1984.
Many businesses that achieve great success become greedy and want more. Pharmaceutical companies, such as Turing, have been overpricing life-saving drugs since they’ve been discovered. Martin Shkreli, the CEO of the company that raised the price of the H.I.V medicine, was arrested because of wrongdoings involving his former hedge fund and a pharmaceutical company he previously headed. He has been charged with conspiracy to commit security fraud, wire fraud, and using his previous company to cover personal debts. U.S. Attorney Robert Capers says, “As alleged in the indictment, Shkreli essentially ran his companies like a Ponzi scheme, where he used each subsequent company to pay off the defrauded investors in the prior company” (Shkreli).
Corporate executives like Kenneth Lay and Martha Stewart were taken before the court for poor ethical practices. Leaders of pharmaceutical companies have been found knowing about distribution of unsafe products. Leaders at Coke Cola were found guilty of racial discrimination and leaders of cruise ships fined for dumping waste in the ocean. News reports exposed Wall Street analysts who created phony reports, made profits, and pushing worthless stocks, left citizens questioning if they should invest their money. Leaders of the world’s largest retailer, Wal-Mart, were cited for practices of employee abuses and gender discrimination.
3Walker, Hugh: Market Power and Price levels in the Ethical Drug Industry; Indiana University Press, 1971, P 25.
Stewart owned 4,000 shares of ImClone stock and sold all of her shares two days prior to the FDA’s rejection of the company’s cancer treatment drug, Erbitux. The FDA’s denial of Erbitux resulted in a 16% drop in ImClone’s stock value. Stewart sold her shares based on a tip provided by her broker, Peter Bacanovic; he was also the broker for ImClone’s CEO, Sam Waksal. Bacanovic had told Stewart that Waksal was selling his $5 million in shares along with his daughter’s holdings (Leite,
Martinez, Barbara “Firms Paid to Trim Drug Costs Also Toil for Drug Makers” The Wall Street
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm (A&E Networks Television). Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.
"This is why the market keeps going down every day - investors don't know who to trust," said Brett Trueman, an accounting professor from the University of California-Berkeley's Haas School of Business. As these things come out, it just continues to build up"(CBS MarketWatch, Hancock). The memories of the Frauds at Enron and WorldCom still haunt many investors. There have been many accounting scandals in the United States history. The Enron and the WorldCom accounting fraud affected thousands of people and it caused many changes in the rules and regulation of the corporate world. There are many similarities and differences between the two scandals and many rules and regulations have been created in order to prevent frauds like these. Enron Scandal occurred before WorldCom and despite the devastating affect of the Enron Scandal, new rules and regulations were not created in time to prevent the WorldCom Scandal. Accounting scandals like these has changed the corporate world in many ways and people are more cautious about investing because their faith had been shaken by the devastating effects of these scandals. People lost everything they had and all their life-savings. When looking at the accounting scandals in depth, it is unbelievable how much to the extent the accounting standards were broken.
...The Sarbanes-Oxley Act deals with the proper filing of financial paperwork along with rules and regulations to follow while working as a top business (The Sarbanes-Oxley Act, 2002). Some of the consequences that derived from the Act include fines and possible imprisonment up to 20 years for destroying documents. It also made it a crime to destroy corporate audit records. Since the Sarbanes-Oxley Act was in place at the time Bernie Madoff was charged with security fraud, he received 25 years in prison for his wrong-doings (Bernard Madoff, 2014). These crimes by Madoff and Enron have made for safer business practices and stricter laws. However, to ensure cases of this magnitude do not occur again, companies must not only abide by mandated law, they must develop a culture deeply rooted in strong ethics. Character matters in a business just like it does in people.
The abuse and addiction of prescription drugs has been a serious ongoing issue for many years. Many lives have been ruined and lost. But who is to be held accountable? Well today, July 13, 2017, more than 400 individuals were charged with health care and opiod scams that amounted to $1.3 billion in false billings. According to Attorney General Jeff Sessions this was the, “largest health care fraud takedown operation in American history.”
For everyone in the business world, Mark Zuckerberg is a well-known name to them. He is an undeniably young, successful businessman. However, Zuckerberg is also a very successful leader in his own company as well as in the world. His impact from creating Facebook is more than just impressive. Zuckerberg created the social media website where people get connected virtually and led the company to incredible success. Zuckerberg’s leadership style can be seen with inspirational motivation, intellectual stimulation, and idealized influence. With all the aforementioned components, Mark Zuckerberg is a great example of transformational leadership.
... Rajaratnam hedge-fund Galleon Group. The group had over $1.5 billion dollars invested with many Sri Lankan companies (Ondaatjie, 2009). Once Rajaratnam was indicted many investors decided to pull their funds out of Galleon Group. This created chain reactions that led to all investors pulling their money from the hedge fund. Millions had to be removed from Sri Lanka to pay back its investors. This left many Sri Lankan companies with little cash on hand to continue operation and expansions.
By 2001 the telecommunications market was softening; meaning prices were falling due to an excess of supply and a decrease in demand as the dot com boom ended. WorldCom had already signed contracts with third party telecommunication companies promising to complete their calls. These multi billion dollar contracts were actually costing more in expenses than what the company would or was receiving in revenue (Sandberg, Solomon, & Blumenstein, 2002).
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex, he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm. Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.