Running head: EFFECT OF UNETHICAL BEHAVIOR ARTICLE

Effect of Unethical Behavior Article Name Here ACC/291 Instructor's Name Here Date Here

EFFECT OF UNETHICAL BEHAVIOR ARTICLE Effect of Unethical Behavior Article In recent news, government authorities are planning to arrest two former JPMorgan

Chase employees suspected of masking the size of a multi-billion trading loss, a dramatic turn in a case that tarnished the reputation of the nation's biggest bank and spotlighted the perils of Wall Street risk-taking (Protess & Silver-Greensberg, 2013, para. 1). The two former employers, Javier Martin-Artajo and Julien Grout are facing possible criminal fraud charges and may be extradited under an agreement with British authorities. Martin-Artajo was a manager who oversaw the trading strategy and Grout was a low-level trader in London (Protess & SilverGreensberg, 2013). The losses at the heart of the JPMorgan case stemmed from outsize wagers made by the traders at the bank's chief investment office in London. The traders used derivatives - complex financial contracts whose value is typically tied to an asset like corporate bonds - to be on the health of large corporations like American Airlines (Protess & Silver-Greensberg, 2013, para. 6). Those trades soured last year, racking up steep losses for the bank. JPMorgan, which initially disclosed the problem last May, has since announced that the losses reached more than $6 billion (Protess & Silver-Greensberg, 2013, para. 7). Investigations show that the manager directed the low-level trader to falsify internal records, understating the value of their trades causing JPMorgan to understate costs by $459 million (Protess & Silver-Greensberg, 2013). The Securities and Exchange Commission (SEC) is expected to cite JPMorgan for lax controls allowing traders to undervalue the bets. In an unusually agressive move, the SEC is seeking to extract an admission of wrongdoing from the nation's biggest bank. If JPMorgan concedes to that deman, such an admission would reverse a

EFFECT OF UNETHICAL BEHAVIOR ARTICLE longtime practice at the SEC, which has allowed defendents for decades to "neither admit nor deny wrongdoing" (Protess & Silver-Greensberg, 2013, para. 14). Under section 404 of the Sarbanes-Oxley Act of 2002, companies are required to establish internal controls and procedures for financial reporting. The chief executive and chief financial officer personally must declare that they have reviewed and approved the auditors' report and that the data is accurate. Section 404 forces top executives to be responsible and accountable for the information in the financial reports of their company. Reforms on the Act continue to improve financial reporting requirements, the configuration and quality of audit

procedures, and safeguards for investors. The Sarbanes-Oxley Act of 2002, provided extra legal protections to companies and forced executives to take personal responsibility for their actions. The Act is a legal addition to the cautionary measures companies should use to protect the company and its employees. Pursuing criminal charges against Martin-Artajo and Grout and possible civil charges against JPMorgan, the government is faced with the challenge of proving their case to a jury who must make every attempt to grasp reporting procedures, standards, and regulations in relation to Generally Accepted Accounting Principles (GAAP) and The Sarbanes-Oxley Act. The jury must also understand the roles of the SEC, the Public Company Accounting Oversight Board, and the Financial Accounting Standards Board to reach a sound decision. The usual methods used to test the scope of juror's comprehension abilities are not applicable as there is no way to test accurately if jurors will be able to understand all facets of the case. In cases such as Enron, WorldCom, and AGI, the issue at hand extends to the decisionmaking process in a court of law. Is it impossible for a jury of unqualified individuals to reach a rational and ethical verdict in a case that requires the knowledge and understanding of complex

EFFECT OF UNETHICAL BEHAVIOR ARTICLE controls and legal regulations. The most obvious solution would be to change the legal system but that conflicts with equitable rights that are the foundation of the Nation. Juries are trusted and given the responsibility of reaching a verdict based on evidence and personal understanding

of such evidence. The nature and knowledge of each juror is ultimately the deciding factor. The moral existence of individuals determines their sense of obligation to act ethically.

EFFECT OF UNETHICAL BEHAVIOR ARTICLE References Protess, B., & Silver-Greensberg, J. (2013). U.S. said to plan to arrest pair in big bank loss. Retrieved from http://dealbook.nytimes.com/2013/08/09/authorities-set-to-arrest-2former-jpmorgan-employees-in-london-whalecase/?nl=todaysheadlines&emc=edit_th_20130810&_r=1&