Posted by Radhika Kapadia.

The real cost of bribery is a question that often lacks a definitive answer.  It seems that Och-Ziff Capital Management, a hedge fund headquartered in New York City, is learning a hard lesson for allegedly engaging in bribery in Africa.  The firm is set to pay a hefty price of $412 million dollars, but the SEC has added the implicit cost of hindering fundraising by insisting that the firm clear any potential deals with investors with state regulators, adding considerably lengthy minutes and cumbersome dollars to the fundraising process.

Because of the massive bribery allegations, the firm was unable to obtain a waiver for the penalties corporations subject to civil law enforcement sanctions or criminal charges, such as bribery, typically face.   As a result, the company will be faced with the tremendous cost of an increased fundraising process and the more-than-ever watchful eye of the SEC over future investment transactions.   In the burgeoning era of bribery cases, the question of whether dollar penalties are truly enough to deter corporations from engaging in illegal acts is often difficult to assess.  However, the SEC is beginning to believe that financial consequences, coupled with other implicit penalization costs will truly begin to reduce bribery within the corporate world.

The allegations against Och-Ziff are primarily as a result of their dealings with Dan Gertler, an Israeli diamond-trade millionaire.  According to the Wall Street Journal, Gertler was known to use political connections in Africa to defeat competitors.  The Wall Street Journal noted that approximately “$250 million of Och-Ziff dollars were used to bribe the current president of the Democratic Republic of Congo in exchange for diamond mining rights.”  Despite blatant warnings and advisement from their lawyers, Och-Ziff executives, such as chief executive Daniel Och, chose to deliberately ignore corruption allegations against Gertler. Subsequently, the African subsidiary of Och-Ziff pleaded guilty to conspiracy to commit bribery, resulting in one of the largest settlements under the Foreign Corrupt Practices Act.   It seems that Och-Ziff is slowly learning that the true cost of bribery is pervasive, and that ignorance truly is not bliss.

Radhika is a graduate student with a concentration in Forensic Accounting at the Feliciano School of Business, Montclair State University, Class of 2017.

Posted by Orintia Daniels.

Bankrupt: “(of a person or organization) declared in law unable to pay outstanding debts.” According to dictionary.com, this adjective simply means that a particular person or organization is in debt and owes money to another organization or person. I have came across an article called “How do I declare Bankruptcy?” which explains the various forms of bankrutpcy as well as how someone can actually declare bankruptcy.

Let’s talk chapters! No, not just any chapters; specifically, let’s review Chapters 7, 11, and 13 of the Bankruptcy Code. Let’s explain, starting with Chapter 7.

Have you ever heard the term “Everything must go?” Well, Chapter 7 of the Bankruptcy Code, states that whoever files under that chapter might lose everything. For example, a person may lose his or her home, due to not being able to pay the bank their debts. Chapter 7 “liquidates your assets to pay off as much of your debt as possible. When it is all done, you are left with the least debt possible, but you usually have to sacrifice a number of possessions along the way to make that happen.” (HG.org).

On the other hand Chapter 11 is mainly for businesses, such as corporations and partnerships, but can be available to individuals. It has no limits on the amount of debt, as Chapter 13 does. It is the usual choice for large businesses seeking to restructure their debt. Under Chapter 13, the Code:

allows the filer to reorganize their debt, making it more manageable. Under a Chapter13 bankruptcy, the debtor is able pay off their debts over a period of three to five years. For filers with consistent, predictable incomes, a Chapter 13 bankruptcy may be a great way out of debt by creating a sort of legal grace period. If the debtor makes all payments required under the bankruptcy order, and there are still debts remaining at the end of the grace period, those debts are discharged” (HG.org).

Overall, Chapter 13, is primarily for personal struggles, by anyone who may not be able to pay off their debts.

For one to declare bankruptcy, there are two main methods: as an individual, which is to voluntarily file for bankruptcy, or wait for creditors to ask the court to declare you bankrupt. To further understand the different ways to file for bankruptcy and the different forms of bankruptcy, I personally suggest that you continue your interest on the following website.

Orintia is a marketing major with a minor in economics at Montclair State University, Class of 2017.

Posted by Nicole M. Encalada.

After Volkswagen faced its emissions scandal in back in 2015, German police have decided to further the criminal investigation by searching Audi’s German headquarters and offices in Ingolstadt. Back in March, Audi had been placed under a fraud investigation in regards to its parent company, Volkswagen. The main goal in this investigation was to determine who was responsible for the corrupt actions, which released an illegal amount of emissions. Moritz Dreschel, Audi spokesperson stated, “Audi is fully cooperating with authorities as we have the highest interest in clarifying matters.” He also went on to say that the raids were not only held in Igoldstadt, but in their plant in Neckarsulm.

Last year, Volkswagen admitted to having equipped its engines with a software that was able to detect when the vehicle itself is being tested. Once detected, emissions controls would shut off. The software would release the solution that would neutralize the emissions, making the high levels undetectable. The result; Volkswagen’s cars would emit 40 times more emission than the EPA allows of nitrogen oxide. It is not only a danger to the environment, but it garners concerns for the public’s health. Unfortunately, over 2 million of the company’s vehicles used this software.

The parent company has since pleaded guilty to all fraud charges in the United States. Volkswagen has now agreed to pay $22 billion in penalties and settlement charges in the U.S. Now, there are six executives facing criminal charges, although prosecutors have not yet released any names of those executives. While top managers have assured the public that they are not responsible for the company’s wrongdoings, investigators are looking for any evidence of criminal behavior or any violations by Audi or its parent company. Both companies are now subject to different penalties as both companies are based in different German jurisdictions.

Nicole is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Sources:

https://www.usatoday.com/story/money/cars/2017/03/15/audi-german-headquarters-searched-emissions-probe/99199964/

Posted by Yuanda Xu.

In 2003, Lucent Technologies decided to fire the CEO, COO, Financial Executive and marketing manager in China. Lucent did this because company in China bribed the Chinese officials to get more benefits. As expected, Lucent fired these four people, and paid $2.5 million to settle charges. The company paid a $1 million fine to the Justice Department and $1.5 million to the Securities and Exchange Commission.

In 1977, America enacted the “Foreign Corrupt Practices Act” to prohibit companies from bribing officials in other countries to get more benefits. What Lucent Technologies did violate the Act, because Lucent Technologies bribed the Chinese officials to get more benefits and reduced business opportunities for other companies. That violates the FCPA.

Yuanda is a business management major at Montclair State University, Class of 2017.

Posted by Danielle Lindsay Feoranzo.

In the United States, freedom of speech is protected by the First Amendment. It is a prized right and the courts have protected this right to the fullest extent. As Americans in a democratic country, we have the power to speak our minds to ensure we can voice our political opinions and criticize government actions or policies. Thus, as citizens we hold great authority for which could either positively and or negatively influence our country’s future.

In today’s world, social media has made a strong precedence in our community and the functionality of our world. This includes Twitter, Instagram, Tumbler, and the heavy-weight, Facebook. These outlets of social media can be used by famous celebrities to endorse a product, or politicians to promote themselves and their campaigns. Social media is an outlet that can connect one with the world, therefore in essence is a huge stage to express oneself and one’s opinions.

It was on June 1, 2015, the Supreme Court ruled in favor of a Pennsylvania man who posted many violent messages on Facebook (the Court raising implications of freedom of speech). However, prior to the Supreme Court hearing the case, the man was convicted under a federal threat statue and sentenced to jail time of forty-four months. The man appealed this judgment, stating the government should have been required to prove he actually intended to make a threat. The Pennsylvania man argued he was exercising his freedom of speech protected by the First Amendment. He also mentioned he was inspired by the artist Eminem and his lyrics for which is recited and had no intention to threaten anyone.

The Supreme Court ruled in his favor and stated, “It was not enough to convict the man based solely on the idea that a reasonable person would regard the communications as a threat” (Ariane de Vogue, CNN). What is important to take notice is the “reasonable person” standard was rejected by the Court. This is because the government needed to prove the defendant’s intent.

To conclude, the Pennsylvania man expressed himself on Facebook, whether it was crude to some or not, it did not uphold in court as a threat. This case is another example of how the Court will go out of its way to protect speech under the First Amendment.

Danielle is a business administration major with a concentration in management information and technology at Montclair State University, Class of 2016.

Posted by Arleen Frias-Arias.

After reviewing an article posted December 16, 2014 by Madeline Boardman for Us Magazine, I found interesting the development of this case. A singer named Mitsou is suing singers and celebrities Beyoncé and Jay Z, for mismanagement and stealing. The Hungarian singer has a song called “Bajba, Bajba Pelem,” which allegedly Beyoncé and her team took from her song and sampled Mitsou’s vocals for the single “Drunken in Love.”

The interesting part is that Mitsou has never exactly signed papers that would permit anyone to use her voice for any type of use, including trade purposes. According to New York Post’s Page Six, the voice of Mitsou was manipulated for sexual erotica purposes without her permission. According to Mitsou her voice is featured in the overall song for about 1.5 minutes. This could be a huge problem for Jay-Z’s company and Beyoncé as an artist, because after hearing both sides and songs, there is a huge similarity between songs.

In my opinion, this case will require plenty of experts to prove the guilty actions of singer Beyoncé and Jay-Z. Even though the song only has a couple seconds of the actual voice of Mitsou, there are heavy accusations being made. Beyoncé has not yet commented on the situation but I think in this situation is where we bring in copyrights and hard evidence to prove statements.

In enforcing copyrights against the defendant there needs to be a letter of warning, enlisting the acts of infringements. Now since there were not any responses by the infringing party, legal actions are acceptable at this point. According to John Hornick of Finnegan.com, the business law rules most copyrights depend on is whether or not the copyright was even registered with the United States at the time of the defendants acts.

I believe Mitsou will have to file a copyright infringement lawsuit seeking compensatory harms. This situation is a very sensitive especially if Beyoncé is found liable; there could be over thousands of dollars probably billions returned to Mitsou for her work being unfairly taken without permission.

Arleen is a marketing and communication/TV production major at Montclair State University, Class of 2018.

Posted by Varundeep Singh.

Over the past few years Wells Fargo employees have been secretly scheming customers and breaking rules and crossing ethical boundaries that should not be crossed. Wells Fargo employees were making “dummy accounts,” or best described as fake accounts, to meet their sales quotas and receive bonuses. These accounts were not authorized, but they still somehow made the bank a lot of money because Wells Fargo customers were being charged random fees that were not rightfully associated to them. The employees went as far as making fake emails and fake pin numbers to make these accounts look real and make them work. In the article it states, “The scope of the scandal is shocking. An analysis conducted by a consulting firm hired by Wells Fargo concluded that bank employees opened over 1.5 million deposit accounts that may not have been authorized.” This shows how huge the scandal really was and how far the employees at Wells Fargo went just to meet their quota.

In many cases, the employees would take money out of customers accounts and put it into the fake accounts. This would lead to over draft fees because customers would not have enough money in their account. Wells Fargo was charging these fees and making money off of their customers who did nothing wrong. This dilemma with Wells Fargo shows how corrupt big banks can be and how much stricter they need to be on their employees. 1.5 million fake accounts is a lot of illegal activity and the fact that the company took so long to catch on shows that their management was really weak and careless. This is morally wrong and Wells Fargo should have been fined more than they did get fined.

Wells Fargo’s agreed to pay $185 million in fines and $5 million in refunds to their customers. Many people feel that they were let off too easy because the scope of this scandal was much more humongous and impacted people more. With all these dummy accounts, it is evident that Wells Fargo definitely schemed more than $5 million from customers.

I believe that a big bank such as Wells Fargo should know where they stand and by letting a scandal like this happen; they have shown that they cannot be trusted. In my opinion Wells Fargo should have faced much bigger consequences and by paying such a small amount of money and firing 5300 employees within two years they were still let off very easily. All in all, the Wells Fargo scandal will forever be an example of how big banks cannot be trusted and how there should be stricter regulations towards these banks. Something like this should be avoidable in the future if the right actions are taken now.

Varundeep is a finance and management major at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Keith DeYoung.

On Thursday, March 23^rd, The Justice Department ended its antitrust lawsuit against AT&T’s DIRECTV with a settlement. In early November 2016, The Justice Department filed the lawsuit, after they claimed DIRECTV was in talks with three of its rivals, then AT&T, Charter Communications, and Cox Communications. These communications allegedly contained confidential information about whether or not to carry Sports Net LA, the sole provider of Dodger games. Time Warner Cable in a deal believed to be worth 8.35 million dollars, acquired the rights to distribute the channel, and thus the other companies would have to pay Time Warner Cable in order to provide it to their viewers. However, the other cable providers believed that Time Warner Cable was charging too much for its product, and thus did not buy the rights.

In the Justice Department’s view, they broke the law when they allegedly discussed that none of them would buy the channel, in order to make sure that each company would not lose customers if one company bought the channel and the others did not. However, DIRECTV claims they did not communicate with any other company, and reason that no one accepted the channel was solely due to its price.

By allegedly agreeing not to buy the sports channel amongst themselves, and ensuring none of them would lose viewers, the Justice Department argues that the companies were in fact violating antitrust law because they were sharing confidential information amongst themselves in order to seek financial gain and stability. Antitrust laws seek to prevent vast amounts of a certain market from being held in the hands of a few, as well as promotes competition, and an overall free marketplace. This prevents monopolies and total control over a market, which often ends in unfair prices for consumers. Although DIRECTV, AT&T, Charter Communications, and Cox Communications were four different companies at the time, by collaborating and making the agreement not to carry the sports channel, it can be argued that they resembled a trust by acting as a group, and thus prompted the Justice Department to file this suit. However, by settling the case, the Justice Department instead of taking severe legal action, gave AT&T’s DIRECTV an agreement that they do not illegally communicate with other companies over confidential matters.

Now that the case is settled, AT&T who owns DIRECTV can now legally focus on their pending acquisition of Time Warner Cable. Many are critical of this deal and similarly to antitrust law, claim that it is concentrating the power of this particular market into the hands of too few, and thus creating a monopoly. Hopefully, learning legal lessons from their antitrust case, AT&T and DIRECTV can successfully tread the thin line between strategic move, and totally and unethically taking over of an entire market.

Keith is a finance major at the Stillman School of Business, Seton Hall University.

Sources:

https://www.wsj.com/articles/justice-department-settles-antitrust-claim-against-directv-1490312878

https://www.wsj.com/articles/justice-department-sues-directv-for-collusion-during-dodgers-tv-talks-1478105262

Posted by Orintia Daniels.

Bankrupt: “(of a person or organization) declared in law unable to pay outstanding debts.” According to dictionary.com, this adjective simply means that a particular person or organization is in debt and owes money to another organization or person. I have came across an article called “How do I declare Bankruptcy?” which explains the various forms of bankrutpcy as well as how someone can actually declare bankruptcy.

Let’s talk chapters! No, not just any chapters; specifically, let’s review Chapters 7, 11, and 13 of the Bankruptcy Code. Let’s explain, starting with Chapter 7.

Have you ever heard the term “Everything must go?” Well, Chapter 7 of the Bankruptcy Code, states that whoever files under that chapter might lose everything. For example, a person may lose his or her home, due to not being able to pay the bank their debts. Chapter 7 “liquidates your assets to pay off as much of your debt as possible. When it is all done, you are left with the least debt possible, but you usually have to sacrifice a number of possessions along the way to make that happen.” (HG.org).

On the other hand Chapter 11 is mainly for businesses, such as corporations and partnerships, but can be available to individuals. It has no limits on the amount of debt, as Chapter 13 does. It is the usual choice for large businesses seeking to restructure their debt. Under Chapter 13, the Code:

allows the filer to reorganize their debt, making it more manageable. Under a Chapter13 bankruptcy, the debtor is able pay off their debts over a period of three to five years. For filers with consistent, predictable incomes, a Chapter 13 bankruptcy may be a great way out of debt by creating a sort of legal grace period. If the debtor makes all payments required under the bankruptcy order, and there are still debts remaining at the end of the grace period, those debts are discharged” (HG.org).

Overall, Chapter 13, is primarily for personal struggles, by anyone who may not be able to pay off their debts.

For one to declare bankruptcy, there are two main methods: as an individual, which is to voluntarily file for bankruptcy, or wait for creditors to ask the court to declare you bankrupt. To further understand the different ways to file for bankruptcy and the different forms of bankruptcy, I personally suggest that you continue your interest on the following website.

Orintia is a marketing major with a minor in economics at Montclair State University, Class of 2017.

Posted by Yuanda Xu.

On Oct. 30, 2014, Sembcorp Marine’s finance director Wee Sing Guan was sentenced to 39 months in prison for falsifying the accounts of the group’s Jurong Shipyard, Sembcorp’s wholly owned unit. The company lost “hundreds of millions of dollars’ worth of marked-to-market losses that Wee had incurred on foreign exchange and options trades positions he held with a host of banks, including OCBC Bank, DBS Bank, BNP Paribas (BNP), Societe Generale (SocGen) and Standard Chartered Bank.”

According to criminal law, falsifying account records is an unlawful action. Falsifying records can influence the stock market by making investors believe the company’s stock is worth it to buy. But after a company goes bankrupt, people who hold the stock will lose all their money. The offenses “carry a maximum penalty of an unspecified fine and a seven-year jail term, for each charge.”

Yuanda is a business management major at Montclair State University, Class of 2017.