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Tangled Webs 1

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Tangled Webs Case Study

1. Write a summary of the case (approximately 100-150 words).

James Gansman was a lawyer and senior partner at Ernest & Young’s New York office. He was looking for an affair on AshleyMadison.com. He focused on the fine details of severance pays and compensation for executives at takeovers. Over time, Gansman came into contact with Donna Murdoch who he sent stock tips and hints to after they had become comfortable with each other and had moved to daily phone calls and messages.

Eventually the communication became more than just trading tips for personal favors. Murdoch shared tips with another man she met online who happened to become her supervisor and she shared tips with her father who was charged with securities fraud earlier on. Over time, the SEC caught wind of her trading activities and started an investigation on her which led to a full blown criminal investigation about her activities. She eventually; after many tries; decided to plead guilty for a lighter sentence and gave up all the information she could about Gansman.

Eventually Gansman was barred from the state of New York and was not allowed to practice law there anymore. He was sentenced to one year and one day in jail. By the SEC case, Gansman settled on a $250,000 case, Murdoch was charged $404,054 which was waived due to inability to pay and her father was charged with $265,924. Murdoch has not been sentenced on the criminal case yet. 2. Identify (lists) the ethical issues that have arisen in this case. (about 100 words)

* Extramarital affairs: Seeking avenues apart from marriages for excitement. Not necessarily a business ethics issue.

* Gansman inside information about mergers and acquisitions: Being part of M&A teams, he had access to private and confidential information which he should have keep discreet.

* Gansman violating the compliance policy: He discussed non-public information with an outsider although he had signed documents stating he has not and will not.

* Murdoch violating company policy: She confirmed that she has not received information or stock tips that she traded on and disclosed that she will not trade based on anything she receives that is not public information.

* Murdoch providing insider tips to others: Not only did she gain using the tips she received, she also disclosed those tips to her supervisor so that he may conduct transactions as well as her father who was in debt due to securities fraud sentencing.

* Murdoch provided inaccurate information to the SEC and FBI: She lied to the authorities at first and made efforts to remove all information on her computer to show that there were no ties between her and anyone who could have given her stock tips.

3. Explain in detail each ethical issue (e.g. what’s occurred, who’s affected, etc.).

Insider information: Gansman disclosed private information about his clients which he was not allowed to do based own his compliance manual and the SEC. His information helped Murdoch gain financial compensation through her trading practices. Murdoch also violated her compliance codes by using this information for her personal gains along with disclosing this information to her supervisor and her father for their gains. These were violations the compliance and SEC which were considered securities fraud which could in turn lead to criminal prosecutions which they did.

Impeding investigations: Murdoch took drastic measures including paying off someone to ensure that her actions could not be traced back to her. She hindered and mislead the Federal Bureau of Investigations and Securities and Exchange Commission in their investigation into her. She eventually disclosed accurate information about it but threw Gansman into the mix as well. The unethical part of this was her hiding and providing inaccurate information about everything initially. If she disclosed all accurate information initially, she would have potentially had a much lower sentence and possibly less of a battle with the investigation agencies.

Extramarital Affairs: In tough financial times, many couples tend to seek other avenues of excitement for a way out of current life affairs. Murdoch was drawn to Ashleymadison.com due to financial problems and Gansman due to work related stresses. They both violated the sacred bond of matrimony which may not have been unethical from a business perspective but when thy used those avenues for personal financial or personal gains, they unintentionally labeled it as prostitution where Gansman would provide tips for personal favors and gifts (of no monetary value) and Murdoch would use that information to increase her financial position.

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