G1 Ten Links

Should Question at Issue:

Should American financial watchdogs and prosecutors continue to uphold the same scrutiny and sentencing of white collar crimes?

When I first heard the term “White Collar Crime” on the news during the Enron Scandal, I asked my dad what it was. He replied, “Well Mark, it’s when someone steals a lot of money armed wth nothing but a stapler. Often when we think of crime in the United States, images of weapons, jail cells, and gavels in the courtroom come swarming through our heads. We don’t as often think of lavish vacations, gucci clothing, and luxury sports cars purchased by capital gained using unethical and illegal business practices. Yes, white collar crime often happens in the wealthiest of communities- under the leadership of high-class, wealthy citizens that are respected by many. But are American financial regulators doing their jobs? Are our courtrooms prosecuting the guilty and protecting the innocent? These are valuable questions to consider in light of some recent events such as the 50 billion dollar Bernie Madoff Ponzi scheme.

Sources:

1. Fowler, Tom. “An Era Ends Today as Skilling Learns Fate: Some Counting on a Long Sentence for Ex-Enron CEO.” Houston Chronicle (TX), (2006): .

http://onesearch.uoregon.edu/metasearch/record?group=000983&resultSet=006571&startRecord=2

This is a journalistic source from the Houston chronicle that raises questions about the prosecution of the former Ex-Enron CEO. The Enron scandal was a hug example of fraudulent accounting fraud, insider trading, and corporate accountability. It wasn’t until recently that tapes were uncovered exposing Executives laughing about making “billions by lunchtime” perpetrating fraud. The bigger issue with Enron was the fact that 30,000 innocent people at Arthur Andersen LLP lost their jobs, as well as the 22,000 at Enron that lost both their jobs and their life savings tied up in Enron stock. While executives receive sentences for their actions, nothing can make up for the financial harm they cause to their employees under them. Should the government provide protection to employee victims? Should scammed investors receive protection? These are all important questions that this source raises with relevance to my final essay.

2. BARBOZA, DAVID. “MANAGEMENT; Victims and Champions of a Darwinian Enron.” New York Times, (2001): 5-4.

http://www.nytimes.com/2001/12/12/business/management-victims-and-champions-of-a-darwinian-enron.html?scp=1&sq=victims%20and%20champions%20of%20a%20darwinian%20enron&st=cse

This is a journalistic source coming from the New York Times. It raises questions about the victims of the Enron scandal as well as those who may have profited off of it. The biggest paradox that this article discusses is the innovative business model that Enron used to mimic the marketplace. While it never encumbered corporate hierarchy with creativity, it encouraged young people in the company to bring new ideas into the business forum. It was extremely innovative and had a business model that could have continued to revolutionize the trading industry if it hadn’t been for executive greed. But nonetheless, this article shows how innovation by many shattered to bits because of the actions of a few. Since this is a New York Times source, it is paid for by a family rather than a conglomerate like one of the Big “Five”, and thus their liberal perspective might show an interest to the people rather than to their investors.

3.  Williams, James. “The Lessons of ‘Enron’: Media Accounts, Corporate Crimes, and Financial Markets.” , 12.4 (2008): 471-499.

http://onesearch.uoregon.edu/metasearch/record?group=001062&resultSet=007116&startRecord=5

This is a peer-reviewed academic source that reviews over 300 newspaper and magazine articles that followed the Enron and WorldCom scandals. It argues that the media coverage that followed is rooted in the nature of our financial markets and was a result of particular market discourse. This source will be relevant to my essay because I will be able to draw parallels to the constitution and the first amendment as allowing for media outlets to influence judiciary sentencing of criminals, scrutiny of market watchdogs, and coverage of the effects on the victims. Since this is an academic source, I don’t think it will be particularly biased or motivated by any financial interest, and provide some valuable insight relevant to my essay.

4. http://money.cnn.com/2008/07/07/news/companies/The_man_who_lost_6B_mclean.fortune/index.htm

The Man Who Lost $6 Billion

This is a journalistic source coming from Fortune magazine about Canadian rogue trader Brian Hunter. This article takes the more conservative side of arguing that his rogue trading might not be as much of a crime as some other media outlets make it to be. While he lost over 6 billion dollars in rogue and fraudulent trading and arguably cost thousands their savings and jobs, the argument of this Fortune columnist is that losing other people’s money isn’t a crime in the nature of the market. The writer blames the black mark that media outlets put on him when he was faced with the charges from the Canadian equivalent of the SEC (FERC) for his fate. Although I may not agree with this article, it will provide good information from the counter-argument that I can address and disprove in my essay.

5. Barlyn, Suzanne. “The $1 Billion Lesson of Nicholas Leeson.” Fortune, 131.6 (1995): 62.

http://web.ebscohost.com.libproxy.uoregon.edu/ehost/detail?vid=2&hid=111&sid=55de2e88-b5ee-409a-a0b9-f2b8a9e7b5cb%40sessionmgr110&bdata=JmxvZ2lucGFnZT1Mb2dpbi5hc3Amc2l0ZT1laG9zdC1saXZlJnNjb3BlPXNpdGU%3d#db=aph&AN=9503177627

This is a journalistic source coming from Fortune magazine about rogue trader Nick Leeson. Nick Leeson was a trader for Barings Bank that put the British firm into bankruptcy and cost 5,600 people their jobs. Barings Bank had investors as prestigious as Queen Elizabeth herself and was the firm that negotiated the Louisiana Purchase. While often American white collar crimes are the only stories that our media outlets report, this source reports on some of the British financial watchdogs and also some of the effects Leeson’s actions had on British victims. This will be useful in making comparisons between white collar crime in our country and the rest of the world to see what kind of standard America has for prosecution and regulation of financial markets.

6. Fitzgerald, Jay. “$8M for Bernard Madoff Victims: William Galvin: Massachusetts ?feeder Fund’ Settlement Sets Standard.” Boston Herald (MA), (2009):

http://onesearch.uoregon.edu/metasearch/record?group=001660&resultSet=011252&startRecord=1

This is a journalistic source from the Boston Herald about William Gavin’s suit against a feeder fund of Bernie Madoff. While a mere 8 million dollars for Massachusetts investors did nothing for the raw 50 billion dollars that was lost in his scheme, this is a story of some success in a crusader’s pursuit of justice for Madoff victims. This source will be useful in my essay in showing how tough it is to compensate scammed investors and employees after a large white collar crime and might be useful in making some points about the responsibilities of financial watchdog agencies. The Boston Herald is a fairly liberal journalistic source and could be in the interest of its investors, but the article makes some very valid points and appears objective.

7. Widdicombe, Lizzie. “Family Jewels.” New Yorker, 84.44 (2009): 19-20.

http://onesearch.uoregon.edu/metasearch/record?group=001660&resultSet=011252&startRecord=7

This is a journalistic source from the New Yorker about the effect of Bernie Madoff’s scheme on victims. It talks about the vast changes in lifestyles that many of the victims went through after the scheme: cancelling vacations, selling homes, selling jewelry to pay bills, and dining changes from Morton’s to McDonald’s. It examines how while some righteous philanthropists were able to pay their employees some millions of dollars, the effects of a 50 billion dollar scheme are immeasurable. In Bernie Madoff’s scheme he was the only one prosecuted, but had dozens of employees aware and working for him. The SEC also failed to investigate into what was a somewhat shady situation, which will be useful in my essay.

8. Cohn, Laura. “How to Spot the Next Bernie Madoff.” Kiplinger’s Personal Finance, 63.3 (2009): 39-40.

http://onesearch.uoregon.edu/metasearch/record?group=001660&resultSet=011252&startRecord=10

This is an institutional source from Kiplinger’s Personal Finance. It talks of measures that can be taken in both legislative terms and by security watchdogs to ensure a Madoff-type ponzi scheme doesn’t  occur again. It suggests that money should always be handed over to a third-party custodian to ensure that money from new investors cannot be used to pay off old investors, as well as other measures like the prevention of a switch of accounting firms to ensure security of investments be written by legislators. This will be useful in coming up with my own ideal view of legislation changes to prevent white collar crime. Since this is an institutional source it is not objective and rather in the interest of those who subscribe and pay for it. Nonetheless, it has good insight on the scheme and a clear vision of a possible and plausible solution.

9. Herb, Jeremy. “The Mess He Left.” Newsweek, 154.4 (2009): 17.

http://onesearch.uoregon.edu/metasearch/record?group=001660&resultSet=011252&startRecord=16

This is a journalistic source that examines the lack of compensation for Madoff victims. It shows the lack of security and protection that investors had (only up to $500,000) on their investment in Madoff Securities and the difficulty Irving Picard will have suing feeder funds and other hedge funds of Madoff’s for victim compensation. This source will be useful once again in showing the house of cards that fell under Madoff’s greedy actions and the lack of security and protection victims have after such a scam occurs. It is a journalistic source that is published by Conde Nast and thus in the interest of investors and those who subscribe.

10. Gibbs, Nancy. “The Moment.” Time, 173.11 (2009): 17.

http://onesearch.uoregon.edu/metasearch/record?group=001660&resultSet=011252&startRecord=18

This is a journalistic source from Time Magazine. The author comments on the court appearance and guilty plea of financial manager Bernie Madoff, his $50 billion Ponzi scheme, his victims, and jail time he will serve. She notes Holocaust survivor Elie Wiesel’s characterization of Madoff as evil, and calling Madoff wicked herself, she points to investors and charities that were ruined financially by his crimes. She further comments on justice and revenge. This will be useful in once again showing the vast effect of Madoff’s actions on the lives of his victims.