The Federal Reserve Bank of New York has come under fire recently with the release of secret tapes supposedly of regulators planning to “go soft” on Goldman Sachs.  Carmen Segarra, a former employee who was assigned to Goldman, claims in a lawsuit that she was under pressure by her superiors to overlook certain findings she made concerning the company.  The Fed eventually fired her allegedly because she refused to comply and change the findings.

In the recordings, one supervisor tells Segarra that basically consumer laws do not apply to certain institutions.  Michael Lewis, best-selling author of “Flash Boys: A Wall Street Revolt,” said after listening to the tapes that, “The Ray Rice video for the financial sector has arrived.”

Segarra’s lawsuit was dismissed for failing to connect her firing with the alleged Goldman disclosures.  The suit is pending appeal.  Nevertheless, the tapes may prompt a Congressional investigation into the matter.  Sen. Elizabeth Warren (D-Mass.), a member of the Senate Banking Committee, stated, “When regulators care more about protecting big banks from accountability than they do about protecting the American people from risky and illegal behavior on Wall Street, it threatens our whole economy.”  She further stated, “Congress must hold oversight hearings on the disturbing issues raised by today’s whistleblower report when it returns in November.”

Posted by Jen Suarez.

To what extent is defamation? From my last blog article, I defined defamation as “malicious and damaging misrepresentation,” where an organization was falsely accused of rape. However, can anyone play to the “defamation card” if they don’t like what other’s have to say? For example, Yelp.com is a website where consumers can post and rate the quality of businesses anonymously. The Rhodes Group, which is a Collin County Texas real estate firm, received a poor review on the Yelp website and is now suing on the grounds of defamation; they are requesting the name of the customer, whose username is “Lin L.” The Rhodes Group does not even believe that “Lin L.” is a real person. In fact, they openly suggest that this username belongs to someone from a competing organization, trying to ruin The Rhodes Group’s reputation. The Rhodes Group, however, is fighting in court against Public Citizen, which claims that revealing the user’s identity violates the user’s right to privacy. Though the negative Yelp review has been removed, there is no confirmation its removal was due to the impending lawsuit.

The Public Citizen lawyer, representing Yelp, stated that there is no justification for revealing the user’s identity, especially since The Rhodes Group did not file any complaint until well over a year after the review had been posted. According to its website, “Public Citizen maintains that the Rhodes Group’s claim violates the one-year statute of limitation for libel suits and, additionally, that the subpoena was issued in the wrong state and therefore cannot be enforced by the Texas court.” The Rhodes Group is fighting back stating, “You can’t use the First Amendment as a shield to make false and defamatory statements about an individual, particularly in a commercial arena.”

The Rhodes Group is absolutely right that Yelp cannot hide behind the “First Amendment Shield,” however, Yelp and Public Citizen are correct that the user’s identity should remain anonymous and there is no justification to reveal it. Bad, anonymous reviews, whether they are fake or genuine, are part of the online world. Millions of users have the ability to hide behind a keyboard and this allows us to bestow harsher criticism without fear of consequences. Freedom of speech does not include libel. Therefore, the result of this court case could determine how “free” freedom of speech actually is on the World Wide Web.

Jen is a business administration major with a concentration in management at Montclair State University, Class of 2017.

Posted by Ethan James.

There was a chemical spill into the Elk River, two years ago, that came from a storage tank owned by Freedom Industries. This spill caused a temporary shutdown of businesses within the region around the river, as well as many residents of the Charleston area needing to go to the emergency room with symptoms of rashes and nausea. The damages caused by the chemical spill hurt the local economy and people, so a class-action lawsuit was ensued.

The lawsuit was against Eastman Chemical and West Virginia American Water Co., as through the actions of both companies lead to damages against the people of the Charleston area. “The suit alleged the water company was unprepared for the spill and that Eastman Chemical didn’t advise Freedom of the dangers of the coal-cleaning agent,”(Michael Virtanen). There is a fear that Eastman did not properly warn the water company of the damage to others or how to properly contain it. In addition, the water company was said to be “unprepared for the spill”(Michael Virtanen), in both the damages that were inflicted on the tanks and how to proceed with the consequences of the spill.

The U.S. District Judge John Copenhaver approved a $151 million dollar settlement that involved both companies, splitting the settlement. West Virginia American Water Co. is going to pay $126 million, while Eastman Chemical will proceed to pay $25 million. “The money will be distributed to affected residents and businesses through an application process to be determined later,”(The Associated Press). There has been an update to proceedings within the water company in order to avoid a repeat of the damages that occurred, while the chemical company has placed new regulations on inspections in order to better advise companies of their products.

Ethan is a management, finance, and ITM Majors and legal studies minor at the Stillman School of Business, Seton Hall University, Class of 2020.

Hacking into computer systems is nothing new, and government and businesses alike have always been aware that they must be one step ahead of computer criminals. But the attack on Sony Pictures Entertainment was more than that. It was a shot across the bow in what appears to be a potentially rampant future form of warfare. As a result, every cyber attack on government or business systems must now be carefully examined to see whether it is either criminal or an act of war.

In the face of evidence from the FBI that North Korea was responsible for the Sony attack, senior Republican senators disagree with the administration that it was only a form of “cybervandalism.” Sen. McCain stated this attack “is a new form of warfare, and we have to counter that form of warfare with a better form of warfare.” Sen. Lindsey Graham called “the cyberhacking ‘an act of terrorism’ and suggested re-imposing sanctions on North Korea and adding the country to the terrorism list.” In 2001, President George W. Bush called North Korea part of the “Axis of Evil,” along with Iran and Iraq.

The FBI concluded the attack on Sony was evidenced by IP addresses directly linked to North Korea. This attack was similar to those that occurred last year against South Korean banks and media outlets. The FBI stated:

We are deeply concerned about the destructive nature of this attack on a private sector entity and the ordinary citizens who worked there. . . . Further, North Korea’s attack on SPE reaffirms that cyber threats pose one of the gravest national security dangers to the United States. Though the FBI has seen a wide variety and increasing number of cyber intrusions, the destructive nature of this attack, coupled with its coercive nature, sets it apart.

North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves. Such acts of intimidation fall outside the bounds of acceptable state behavior.

There will most likely be more cooperation between business and government in sharing information and technology. Only together can this new threat to our national security and economy be defeated.

Posted by Bridget Uribe.

During the month of March of 2014, the Securities and Exchange Commission (SEC) charged three executives: Chairman Steven Davis, Executive Director Stephen DiCarmine, and Chief Financial Officer Joel Sanders of Dewey & LeBoeuf, the international law firm, with facilitating a $150 million fraudulent bond offerings. The SEC alleged that the three charged turned to accounting fraud when the firm needed money during the economic recession and steep costs from a recent merger.  They were afraid that their declining revenues might cause the bank lenders to cut off access to the firm’s credit lines. Thus, leading Dewey & LeBoeuf’s financial professionals came up with ways to artificially inflate income and distort financial performance.

The fraud didn’t stop there. Dewey & LeBoeuf then resorted to the bond markets to raise significant amounts of cash through a private offering that seized on fake financial numbers. Dewey & LeBoeuf since have officially went out of business, and the Manhattan District Attorney’s Office charged criminal charges against Davis, DiCarmine, and Sanders. According to the SEC’s complaint, the roots of the fraud dated back to late 2008 when senior financial officers began to come up with fake revenues by manipulating various entries in Dewey & LeBoeuf’s internal accounting system. The firm’s profitability was inflated by approximately $36 million (15%) at the end of the 2008 financial results. “The improper accounting also reversed millions of dollars of uncollectible disbursements, mischaracterized millions of dollars of credit card debt owed by the firm as bogus disbursements owed by clients, and inaccurately accounted for significant lease obligations held by the firm”(SEC Press Release).

Fast forward to the present, a New York judge declared a mistrial Monday bringing an end to the trial for the biggest law firm failure in U.S. history! The decision comes on the 22nd day of deliberations by a 12-member jury, which acquitted the ex-law firm leaders on several dozen counts of falsifying business records. The jury couldn’t reach a verdict on grand larceny and remained deadlocked on more than 90 counts charges facing Steven Davis, Joel Sanders, and Stephen DiCarmine. The three could have faced up to 25 years in prison if convicted of grand larceny, the most serious of the roughly 50 counts each brought against them. The defendants also faced related civil charges brought by the Securities and Exchange Commission and a private lawsuit brought by former Dewey investors who say, “They were duped into buying debt in a 2010 bond offering.” Both of those proceedings had been on hold pending the outcome of the criminal trial. Some highlights of the trial are: prosecutors had likened Mr. Davis to a drug kingpin, overseeing a criminal enterprise. Also, the defense side thought prosecutors didn’t present enough evidence to prove their case, thus choosing not to call any witnesses. Instead, the lawyers relied on the cross-examination of government witnesses to try to distance their clients from the actions taking place in the accounting department. At times, such questioning also prompted praise for the defendants from those on the stand. Where does this lead us now? How the Department of Justice completely lost the case or can a retrial give a favorable outcome in the future? It’s too early to tell, but what I do know is that the long deliberations and mistrial will raise questions about whether the case was too complex.

Bridget is a graduate forensic accounting student at the Feliciano School of Business, Montclair State University, Class of 2016.

Posted by Aitana Robinson.

The battle between Spirit and Led Zeppelin continues in the copyright infringement case over “Stairway to Heaven.” This past July 8th the District Court of California- Western Division, found in favor of the defendants, Zeppelin.  On the 15th of March, Attorney Francis Malfoy filled in the Ninth Circuit Court of Appeals representing Michael Skidmore, the Spirit guitarist, in the hope that the appeals court will correct the mistakes of the trial court.

At the heart of the lawsuit is the accusation that Led Zeppelin copies a riff found on Spirit’s song “Taurus,” which proceeded “Stairway to Heaven.”  Skidmore’s appeal is based off the assumed error that “the trial court refused to let the jury hear the full and complete composition of ‘Taurus’ embodied in the sound recordings…”

Skidmore’s attorney complained about the court “making a series of erroneous instructions on the scope of copyright protection[,] . . . limiting plaintiff’s trial time to 10 hours violated due process and was not even close to an adequate about of time to try this case,” and finally, that “the court seriously erred when defining originality.”  Skidmore has asked the 9th Circuit court to reverse the verdict and call for a retrial.

Aitana is a communications major at the School of Communications and the Arts, Seton Hall University, Class of 2019.

Posted by Natalie Kenny.

The parent company that makes Old Spice, Proctor & Gamble, is being sued by Rodney Colley of Alexandria, Virginia because of a defect in the deodorant. The plaintiff shared photos of himself with burns under his arms which he claims are from Old Spice deodorant. The plaintiff says he suffered “severe rashes, burning, and discomfort” after he used the product and he had to stop using it. In the photo, the rashes look severe.

Procter & Gamble, the parent company that owns Old Spice said that the people who experience rashes and irritation from using the deodorant are in the minority and only make up a small fraction of the company’s overall users. After news broke of this lawsuit, several other individuals came forward with stories about how the Old Spice deodorant gave them rashes and scabbing. The five million dollar lawsuit was filed in U.S. District Court in Ohio and is awaiting trial.

In my opinion, it is not okay for this deodorant to be giving people severe rashes. Even though Proctor & Gamble stated that only a small percentage of users get burns or rashes from the product that is simply not good enough. Consumers should not have to be concerned whether or not they will have a severe reaction to a product that they use every day.

I think that Proctor & Gamble should have to pay for the medical bills of the people who got severe reactions from this product as well as punitive damages to stop them from doing this and to get other companies to make sure their products are safe before selling them to the public.

Natalie is a marketing major at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Keith Cleary.

For almost a half of a decade now, over 40 patent lawsuits have been going on between “the two largest smartphone companies, Apple and Samsung.” (Chowdhry). However, the two companies came to terms on ending all of the patent lawsuits that are outside of the U.S. These countries are all over the world including Britain, Spain, Germany, and Italy. Even though these two technology giants are dropping their lawsuits against each other internationally, they still have not ended their lawsuits against each other in the states. A few years ago, “a jury in California awarded Apple with $119 million out of a $2.2 billion lawsuit against Samsung three months ago”(Chowdhry). Even, though they settled their disputes overseas, the two competitors are still relentless with their lawsuits.

Some of the lawsuits are driven by a patent lawsuit filed in 2011. Steve Jobs was actually behind the lawsuits in 2011 saying, “I’m willing to go thermonuclear war on this.” (Chowdhry). “This” meaning the lawsuits filed in 2011 were over Samsung’s Android. The two companies have tried to work out their differences through a mediator but to no avail. Judge Lucy Koh of the U.S. District Court was actually really hoping for a resolution. She stated, “If all you wanted is to raise awareness that you have I.P. (Intellectual Property) on these devices, messages delivered. In many respects, mission accomplished. It’s time for peace.” She further stated, “If you could have your CEOs have one last conversation, I’d appreciate it.”(Chowdhry). She realizes that the two companies do not want each other copying off their designs and property.

The comical part about all of this is that, with all the lawsuits going on, Samsung and Apple are business partners. Samsung supplies major components to Apple’s products, such as memory chips and processors. However, it does not look like this relationship will last forever. While Apple is one of Samsung’s biggest customers, it looks like their taking business elsewhere—“Taiwan Semiconductor Manufacturing Company,” to be exact. (Chowdhry). Apple buys chips and other components from them.

The good news is that Apple is reducing the amount of lawsuits against Samsung. Apple dropped one of their lawsuits for patent infringement and the two companies settled another lawsuit with the U.S. International Trade Commission regarding an important ban on Samsung’s products (Chowdhry). With the dropped lawsuits, there is a chance for amends and a new relationship between them.

Keith is a business law student at Montclair State University, Class of 2017.

Snow shoveling always has been a means for young people to learn how to run a business. They learn how to advertise, interact with customers, work for a competitive wage, and learn something about service to the community. All businesses are at the service of others; and, snow shoveling, like delivering newspapers, or running a lemonade stand, give young people a way of learning responsibility.

Governor Christie just signed into law (before a major snowstorm) making it legal for residents to offer snow shoveling services without first applying for a permit. Last year, Bound Brook, New Jersey police stopped two entrepreneurial teens for going door-to-door and offering to shovel snow for a small fee. The police told the boys they were not allowed to solicit businesses without a permit. In Bound Brook, the license costs $450. The case made national headlines.

Republican State Sen. Mike Doherty sponsored the “‘right-to-shovel’” bill, stating it “was incredible that some towns wanted teens to pay expensive licensing fees just to clear snow off driveways.”

“The bill removes only licensing requirements for snow shoveling services, and only applies to solicitations made within 24 hours before a predicted snow storm. Towns with laws prohibiting door-to-door solicitation will be able to enforce those laws in all other circumstances.”

Posted by Daniel Lamas.

In October 2013, Shaneen Allen was arrested for carrying a registered gun across the New Jersey border. Allen, who is a Pennsylvania native, was going on a routine visit to New Jersey when she was pulled over. As she opened her glove compartment, the officer noticed the concealed weapon. Allen was questioned and arrested.

Allen’s punishment could have included up to three years in prison, but thankfully her attorney got her out of serious jail time. Allen was in hot water for almost two years. Recently, Governor Chris Christie issued a pardon to Allen and was praised by many gun rights groups. As an American, I feel that the Second Amendment is very important, not only to people as individuals, but mainly to show what this country was built upon.

Personally, I do not feel that Allen did anything wrong as she was a legal, registered carrier and had no bad intentions. Governor Christie did the right thing and helped defend a very important amendment that supports what our Founding Fathers would have wanted. Not many people would have been quick to pardon somebody in Allen’s situation, but luckily for her, Governor Christie had her back. People like Allen who are legal carriers are what keeps the country the way the Founding Fathers intended it to be. If more gun owners were registered like Allen, crime would be monitored easier and street violence would come to an ease.

Daniel is a business management and merchandising major at Montclair State University, Class of 2017.

Posted by Nora Shelbi.

In the article, Isaac (2017), discussed the issue of the Uber investor and claimed that Travis got involved in the material misstatement and fraudulent trading.  As per the investors, it has been declared that such fraudulent activity has been done with the intention to get the outside control of the board; and, he is involved in the breach of contract and breach of duty. Also, the investors are claiming that Mr. Kalanick’s “overarching objective is to pack Uber’s board with loyal allies in an effort to insulate his prior conduct from scrutiny and clear the path for his eventual return as C.E.O.”

The author of the article has declared that all the fraudulent activities which have been done by Mr. Kalanick is mainly due to restoring his position as the CEO and for this purpose, he is using the fraudulent ways which are not allowed at all in the corporate environment. The persons who were in favor of him have declared that he does not want to be the chief executive officer of the company, but others have said that he is doing this just to achieve the control without even having the title of the chief executive officer of the company.

There are many other claims, which are made, including an atmosphere of sexual harassment at workplace. The company is also sued by the sister company of Google for stealing the trade secrets of company, Waymo. Such issues concerning litigation against the company as well as its officials are not in favor of the company. It is deteriorating the image of the company, as well as, dissatisfying the investors to a greater extent. (ISAAC, 2017)

Nora is a graduate accounting student at the Feliciano School of Business, Montclair State University.

Reference:

ISAAC, M. (2017, Aug 10). Uber Investor Sues Travis Kalanick for Fraud. Retrieved Sep 20, 2017, from The New York Times: https://www.nytimes.com/2017/08/10/technology/travis-kalanick-uber-lawsuit-benchmark-capital.html

Posted by Melissa Nomani.

Lawsuits filed against Lumber Liquidators claim that homeowners who put certain laminate flooring into their home are being exposed to high levels of formaldehyde. This puts them at risk and also lowers the value of their property. As of this July, the number of lawsuits filed against the company has gone up from only a mere ten in June. Many lawsuits began being filed after a 60 Minutes episode that aired on March 1, 2015, exposing the high levels of formaldehyde in laminated flooring made in China. Formaldehyde is a known carcinogen and has been linked to cancer and respiratory problems. A study done by 60 Minutes showed that 30 out of 31 of the tested flooring samples (all of the sample were Lumber Liquidators products).

According to a study conducted by 60 Minutes, 30 of 31 flooring samples from Lumber Liquidators did not meet formaldehyde emissions standards. It is estimated that thousands of people have Lumber Liquidators flooring in their homes. Some lawsuits claim that homeowners have suffered from respiratory problems after installing the laminate flooring.

Another issue that has risen is that Lumber Liquidators is being accused of false advertising and selling products comprised of particles that come from endangered habitats and trees. The US Department of Justice is investigating the company for their alleged use of wood. The wood was illegally cut down from Russia–this directly violates the Lacey Act. The Lacey Act does not allow for the importation of products made from woods that are illegally logged.

Furthermore, this past May, Lumber Liquidators CEO, Robert Lynch, resigned. During this month the company also announced that it would be suspending the sale of flooring from China. The company offered homeowners free  indoor air quality screening, if they had purchased laminate flooring from China.

The number of lawsuits against Lumber Liquidators continues to grow.

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

Posted by Patrick Cleaver.

Every law is made to help the public, to protect the safety of the driver, and deliver a reliable car. The car industry knows they make mistakes and are responsible for fixing the damages for free when such mistakes occur and cars get recalled. However, does a used owner know that he/she is able to get his/her car fixed for free once it had been recalled? Most people do not know that a dealer will fix the car for free after it has been recalled, so the damages are never fixed. The car, marked as dangerous, is instead sold at auctions and then sold again without ever being properly taken care off. While this may end up with nobody getting hurt, doing leaves a huge risk at the buyer’s expense.

Delia Robles was one of the unfortunate people who had been taken advantage of by this system and it ended up costing her much more than she bargained for, getting killed by a defective airbag. Ms. Robles was driving a 2001 Honda Civic on her day off from work when she hit a pickup truck. An accident that would normally end with her walking away unscathed turned into her death bed. The car she was driving has been sold five times over a fourteen-year span and was most recently bought by her son who had no idea that the car was not safe. The information which had not been released to him is that the car was never fixed after it had been recalled for problems with its airbags.

The car was equipped with Takata airbags which “have been linked to 15 deaths.” The airbags were not safe due to being made out of product that wore out over time. That meant that the airbag was a time bomb waiting to explode and Ms. Robles is the one who triggered it. When hitting the truck the Honda had released its airbags which burst and sent metal pieces flying at and killing Ms. Robles.

The issue at hand is that there are no safeguards which prevent deaths like these from occurring. The previous owner is not reliable for not fixing the car like a dealership would be had this happened to a new car. That owner is also not responsible for informing the new owner of the risks they are taking by buying the car. The auction simply sells the car “as is” and does not say whether or not the car is safe to buy.

While there are no federal laws protecting the consumer of accidents in used cars, there are state laws which are implemented in order to keep people safe. According to the New York State law, a seller is not allowed to conceal a material defect because that is a fraudulent action. Also, the New York State auctions are not allowed to sell vehicles “as is” unless they are government agencies. This is a step forward towards the right (safe) way, but does not fix the problem because the Department of Finance takes advantage of it. This department still allows clear negligence by huge companies which can lead to more incidents like the one Ms. Robles experienced. CarMax is a great example of this problem. “CarMax, one of the country’s largest used-car dealers, advertise that their vehicles pass rigorous safety tests – even if the cars have unrepaired problems for which recalls have been issued.” These companies are basically misleading the customers, making people believe that their cars are safe when in reality they could be death traps.

No malice can be proven in the case of Ms. Robles since it has had so many past owners and neither her son, nor the owner before him were aware of the recall on the Honda. Unfortunately, Ms. Robles was a victim of a broken system and now the 50 year old will never get to see her three grandchildren grow up.

Patrick is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2018.