Ex-Goldman Sachs Trader Salem Renews Fight For $5 Million

Posted by Ovais Ahmed.

An article posted on bloomberg.com talks about an appeal made by ex-Goldman Sachs trader Deeb Salem to get an extra $5 million he thinks he deserves in bonus money. He has already received $8.25 million and still wants to get more money out of his former company. I don’t understand why the trader can’t settle with the money he has already made, which is more than the average American would probably ever make. To me, it spells out nothing but greed. Salem states he helped Goldman Sachs earn $7 billion in profit and was sought after by many investment professionals in his industry. The article states:

In September, Justice Eileen Bransten denied Salem’s request to set aside a Financial Industry Regulatory Authority panel decision to dismiss his claim, and granted Goldman Sachs’s request to seal portions of the dispute with the former trader. Salem told a state appeals court in Manhattan today that the judge erred in her decision, according to a filing. Salem claimed he helped the bank earn more than $7 billion, and told the arbitration panel Feb. 25 that he was one of the most sought-after investment professionals in the mortgage industry. The panel, described by Salem’s lawyer as a ‘kangaroo court,’ didn’t let Salem call some of Goldman Sachs (GS)’ top trading executives as witnesses, resulting in a miscarriage of justice, according to his original petition.

Goldman Sachs claimed they gave Salem the opportunity to give his evidence, and followed through fully with the law in denying his award claim. Therefore, Salem has appealed the decision is continues his fight for the extra $5 million he believes he deserves due to his efforts at Goldman Sachs.

Ovais is a business administration major with a concentration in management at Montclair State University, Class of 2015.

Pension Holder Chaos

Posted by Kimberly McNamara.

The idea of pensions have been around for nearly 100 years. Detroit, a city that recently filed for bankruptcy, is now facing more monetary concerns, and many are looking for someone to blame. According to The New York Times, the city of “Detroit has been a client of Gabriel Roeder since 1938, when the city first started offering pensions. Now the city is bankrupt, the pension fund is short, benefits are being cut . . . .” Gabriel Roeder Smith & Company is a widely known, consultant and actuary firm dealing mostly with pension plans. This company was hired by the city of Detroit to calculate the amount of money coming in versus the amount of money needed for current and future pension pay-outs.

Many Detroit pension holders are now filing lawsuits against Gabriel Roeder. There are three current cases against Gabriel Roeder: one by members of Detroit’s police and firefighting force, another by Wayne County, and Ms. Estes, a citizen and pension holder in Detroit.

Now Ms. Estes has lost not only part of her pension but much of the savings tied up in her house, while she and her neighbors overpay for paltry city services. She says she might have been spared some of the misery had Gabriel Roeder warned the trustees years ago that the pension system was unsustainable and recommended changes.

Ms. Estes is just one of many who have been put in this situation created by poor business decisions. She was also told that, “she would have to forfeit $25,000 when she reaches retirement age . . . .” There are a multitude of people who had depended on their pension for retirement and simply will never see it.

Unfortunately, Gabriel Roeder would not exceptaccept the advice of other firms including government agencies like the Governmental Accounting Standards Board (G.A.S.B.). If they had, maybe Detroit’s bankruptcy situation would be different and quite possibly there would be no lawsuits being brought againstto Gabriel Roeder Smith & Company.   The firm said they “would vigorously defend itself against the lawsuits,” but lets wait and see how well that holds up in court.

Kimberly is a business major at Montclair State University, Class of 2016.

Liberty of Contract: Removal from the “Anticanon”

Research proposal posted by Elizabeth Donald.

Part One: Topic Explanation

Liberty of contract was originally introduced into U.S. constitutional jurisprudence through the case of Lochner v. New York, 198 U.S. 45 (1905). In this case, Joseph F. Lochner challenged a provision of the New York Bakeshop Act of 1895 that prohibited bakers from working more than ten hours per day and 60 hours per week. The Supreme Court held that this regulation failed to pass constitutional muster in violation of the Due Process Clause of the Fourteenth Amendment. In doing so, the Court found “liberty of contract,” that is, the freedom of individuals and groups to enter into contracts, to be a fundamental right under the Fourteenth Amendment.  Other Supreme Court decisions continued to build on this idea during what is now referred to as “The Lochner Era” of cases. This includes Adkins v. Children’s Hospital, 261 U.S. 525 (1923), invalidating a minimum wage law and Pierce v. Society of Sisters, 286 U.S. 510 (1925), deeming unconstitutional a regulation that led to the closing of many private Catholic schools.

Part Two: Pros and Cons

The Lochner decision was considered one of the most controversial cases of its time after being handed down in 1905. Progressive jurists, politicians, and scholars alike denounced Lochner, whether for attempting to constitutionalize laissez-faire economics or for exceeding judicial authority.[1] They believed that the conservative-leaning Lochner majority reached far beyond the scope of its powers. This is because although the U.S. Constitution does not explicitly list “liberty of contract” as a fundamental right, the court still found it to be so under the Fourteenth Amendment Due Process Clause which states, “[N]or shall any person … be deprived of life, liberty, or property, without due process of law.” U.S. Const. amend. XVI, § 1. In finding a liberty of contract within the Constitution, Progressives saw the majority as an advocate of big business that attempted to adopt policy by means of judicial decision. These Progressive jurists instead encouraged a deference to the legislature on all matters, economic and personal. Since the early 20th century, Progressive ideology has shifted, but still views liberty of contract in a negative light.

Flashing forward to today, jurists across the political spectrum remain highly critical of Lochner. Constitutional theorist Bruce Ackerman places Lochner in his “anticanon” of cases. Unlike early 20th century Progressives, today’s Progressive jurists typically believe in using strict scrutiny to analyze laws regarding personal rights. Yet, they now isolate personal liberties from economic liberties, which are still considered unwarranting of constitutional protection.[2] Twenty-first century conservatives, likewise, do not tend to favor liberty of contract. Conservative jurists today often advocate for a deference to the legislature on both personal and economic issues. Thus, the conservative viewpoint has also significantly shifted from the Lochner Era right-wing belief that natural rights precede positive law and that liberty of contract is one of those inherent natural rights. This leaves little room for hope for the few present-day proponents of liberty of contract. However, the idea of contractual freedom as a fundamental right might not be as bad as many make it seem. In fact, liberty of contract is really a derivative of the natural law.

The natural law, according to St. Pope John Paul II, is a law that resides within the “depths of the conscience.” It is written on the hearts of all men, according to which God will be the judge. Legal theorists have found certain rights to be inherent within this natural law. The Constitution itself was founded on the idea of natural rights. James Madison, a drafter of the Constitution, believed that man “embraces everything to which a man may attach a value and have a right; and which leaves to everyone else the like advantage…”[3] This idea was the bedrock of the Due Process Clause of the Fifth Amendment, which was eventually applied to the states through the Fourteenth. Therefore, the Court majority in Lochner simply viewed liberty of contract as one of these natural rights under due process. This reading of the Due Process Clause achieves much greater validation than suggested by Lochner’s opponents. The Civil Rights Act of 1866, 14 Stat. 27-30, which gave way to the Fourteenth Amendment, listed liberty of contract first in the rights accorded to man. In this act, the 39th Congress wrote that, “[a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties …” This act served the purpose of enforcing the natural rights of man. Therefore, the Lochner majority’s belief in liberty of contract as a fundamental right was not unwarranted.

Part Three: Questions of Ethics

Liberty of contract is intertwined with ethics because the very idea of ethics rests on the natural law. St. Thomas Aquinas said that the natural law “constitutes the principles of practical rationality,” which are the rules by which human action is to be judged as reasonable or unreasonable.[4] It is from this ethical theory that fundamental rights were developed. Not only that, but contractual freedom is essential to business ethics as well. The significance of liberty of contract comes through in the employment-at-will rule which gives employers unfettered power to “dismiss their employees at will for good cause, for no cause, or even for cause morally wrong, without being thereby guilty of a legal wrong.” However, because the employment-at-will theory is supported by laissez-faire economics, it too is often criticized by Progressive jurists who oppose free markets. Yet, even though early 20th century Progressive jurists denounced the Lochner decision for its association with laissez-faire ideals, this does not invalidate the fact that liberty of contract can be viewed as a fundamental right within the natural law. Further, just because liberty of contract is an economic liberty does not mean it cannot be a fundamental liberty. Since provisions of the Constitution and the Civil Rights Act of 1866 demonstrate that both the Founding Fathers and the 39th Congress understood liberty of contract as deriving from the natural law, it is valid to not only consider this liberty as fundamental, but also ethical.

Works cited:

[1] David E. Bernstein, Rehabilitating Lochner (2012).

[2] Ibid.

[3] Colleen Sheehan, James Madison and Our First Duty, THE CENTER FOR VISION AND VALUES (Sep. 23, 2014), http://www.visionandvalues.org/2014/09/james-madison-and-our-first-duty-by-dr-colleen-sheehan/.

[4] Aquinas, ST I-II. Q94.

Cyber Attacks on Corporations – The “New War”

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.

Examine Cyber Monday Deals Closely and Shop Safely

Posted by France Jennica Osmann.

As the holidays are approaching, Cyber Monday is the main day of the year where families are out for great deals for Christmas shopping online. A recent article in the San Jose Mercury News stated:

Cyber Monday is not the only day to find good deals online during the holiday season. If you miss an online special, don’t sweat: Chances are that you’ll be able to get a reasonable deal later in the holiday season or even after Christmas. Be aware of sales tax and any other fees. Depending on whether the merchant has an in-state ‘presence,’ it may or may not add sales tax — Amazon does, along with all merchants that have brick-and-mortar stores in California. California residents are supposed to declare any tax-free online purchases on their state tax returns and pay the sales tax, though I’m not sure how many people actually comply with that law.

For those who decided that they would shop on Cyber Monday, they should also be cautious of scams throughout the holidays. And don’t forget to protect yourself when shopping offline. “Credit card scams and hacks are on the rise so, again, check your recent activity frequently during the holiday season report any suspicious activity.”  The author of the article stated, “I was reminded of this the other day when my bank called to tell me that my Visa card was used to buy gas and groceries in Georgia. I haven’t been to Georgia since I got that card, so it probably resulted from a merchant being hacked.”

Finally, as you try to minimize the risk of online shopping scams, don’t forget that all shopping has risks. Personally, I’m just as worried about pickpockets in malls and fender benders in parking lots as I am about online scams.

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

New Standards in the PCAOB

Posted by Kimberly Culcay.

In the article, “What the PCAOB’s new related-party standard means for auditors,” Maria L. Murphy captures the new standard put in place by the Public Company Accounting Oversight Board (PCAOB). The new standard will require auditors to perform specific procedures that are intended to strengthen auditor performance in high-risk areas, such as significant unusual transactions and financial relationships, and transactions with executive officers. The reason behind the new standard is that in the areas of accounting mentioned above there was a lack of guidance on how to report or treat certain transactions.

The Auditing Standard (AS) No. 18 requires auditors to understand the relationships and transactions with related party transactions as if they were someone working in the company. The auditors must also understand and document the process of understanding the relationships and transactions of the company just as the internal controls of the company itself. The auditors not only have to record how they gained understanding of the relationships and transactions but the auditors must properly account for the transactions, perform procedures to test that the company’s related parties and transactions with those parties have been completely and accurately identified, accounted for, and disclosed. Before this standard, there was a vague and unstructured way of handling related party transactions. Related party transactions are a way that a company can commit fraud by transferring property to a related party thereby creating a conflict of interest. In the article, it also states that the AU Section 316, Consideration of Fraud in a Financial Statement Audit, was amended to require specific procedures to identify and evaluate significant unusual transactions. The main point of amending the standards is for the professional auditors to be able to identify procedures quickly if a situation of fraud exists.

I think amending the standards of accounting to include specific procedures to prevent fraud from happening rather than a professional figuring out what to do if fraud is already done is way more useful. I also think that with the incentive to have these procedures in place, it eliminates some of the gray area of accounting. The need for Forensic Accountants has increased ever since the recession in 2008, with all of the fraud that was done due to the lack of strict standards and procedures to be able to detect fraud early. I am currently a graduate student at Montclair State University; I have been striving to complete my combined program in Accounting BS/MS with a Certificate in Forensic Accounting. Personally, I find that in the emerging economy people have learned from the mistakes made in the past with the scandals, fraud and so on. I think it is important to be a Forensic Accountant in order to apply sophisticated set skills in other aspects of accounting and litigation. I think that if you already know how to be an accountant and with some background knowledge on Forensics, then it could be easier to detect some of the common problems that lead to fraud.

Kimberly is an accounting major with a certification in forensic accounting at Feliciano School of Business, Montclair State University.

Reference:  Murphy, Maria L. “What the PCAOB’s New Related-party Standard Means for Auditors.” Journal of Accountancy. 22 July 2014. Web. 20 Oct. 2015. .

Civil Rights Act Archives – Blog Business Law – a resource for business law students

Posted by Marissa Aniolowski.

These two articles both address the same issue that occur in two different companies. This issue is sexual discrimination. In the first article, a woman accuses AutoNation of promoting a male over her solely because she is a female. The second article, addresses the issue of gender pay in the company Oracle.  As a female business student, I am concerned about being a woman in the business world because of issues like these.

In the first article, Jaqueline de la Torre filed a complaint about AutoNation because when the Parts Manager position opened up, AutoNation immediately hired a male despite the fact that they had a female Assistant Parts Manager who had been on the job for 10 years and was more than qualified to be promoted. According to De la Torre she was told they “needed a man” for the position, and she was then required to teach the new Parts Manager how to do his job because he was previously a sales associate at the dealership. Because the company failed to promote her, the Equal Employment Opportunity Commission is suing AutoNation for violating Title VII and the Civil Rights Act of 1964. As a female, I would defend De la Torre’s side because I know women are just as capable as men are. It is a difficult accusation to prove, but women are undermined in the work world, and that needs to change.

In the second article, three women in the senior product development role are accusing Oracle of paying their male colleagues in the same position more money. The article states, “It’s the third time this year that Oracle has been in the news around pay discrimination. In January, the U.S. Department of Labor filed a lawsuit against Oracle claiming the company systematically pays its white male workers more than women, and men of color.” The women’s lawyer is still searching for evidence to support their claim, but their lawyer, “says he wants to file a class action lawsuit that would cover some 1,200 women at Oracle.” How you prove the company is paying the white men more money than the rest of the workers based solely on their gender and color is a difficult task to prove, but why issues like this are still occurring is concerning. How long will it take people to realize that men, women, and people of different races are all capable of doing the same work, and the diversity will only help companies grow?

In many businesses, discrimination is still currently a big issue. It is an issue nationwide, outside the business realm that needs to be fixed, and should no longer be tolerated. The issues with these cases is finding enough evidence to support the claims and prove that they have been discriminate. The great strides that have been made to equality of race and gender are not something to ignore, but in today’s day and age, any person should not tolerate discrimination.

Marissa is a student at the Stillman School of Business, Seton Hall University, Class of 2020.

Sources:

EEOC sues AutoNation for alleged sex discrimination

https://www.bizjournals.com/southflorida/news/2017/10/02/eeoc-sues-autonation-for-alleged-sex.html

Oracle faces possible class-action lawsuit over gender pay discrimination

https://www.bizjournals.com/sanjose/news/2017/10/02/oracle-gender-pay-discrimination-lawsuit-orcl-goog.html

The High Court rendered an opinion in EEOC v. Abercrombie & Fitch Stores, Inc. The bottom line is unless the employer can show it is unduly burdensome to accommodate a religious practice, it must accommodate the person even if it has a mandatory dress code or other neutrally-applied policy. The employer is required to do so if the person asks for the accommodation or even if the employer suspects the person may need one.

Abercrombie did not hire a Muslim woman because her headscarf violated their “Look Policy.” The policy, which is described as “East Coast collegiate or preppy style,” prohibits the wearing of “caps” (an undefined term in the policy) as too informal for their image. The woman applied for a job at one of the stores. The assistant manager of the store interviewed and conditionally approved her for the job. Yet, the headscarf she wore to the interview indicated to the manager that hiring her would be a violation of their “Look Policy.” Although the woman never asked for a religious accommodation, the assistant manager assumed that she would need one if hired and deferred to the district manager. The district manager thought the scarf “would violate the Look Policy, as would all other headwear, religious or otherwise,” and directed the assistant manager not to hire the woman.

The EEOC sued on the woman’s behalf claiming Abercrombie’s action violated Title VII and won a $20,000 judgment. The Tenth Circuit reversed and awarded Abercrombie summary judgment, ruling an “employer cannot be liable under Title VII for failing to accommodate a religious practice until the applicant (or employee) provides the employer with actual knowledge of his need for an accommodation.”

Title VII makes it illegal for an employer “‘to fail or refuse to hire . . . any individual . . . because of such individual’s . . . religion.’ §2000e–2(a)(1).” Religion “includes all aspects of religious observance and practice, as well as belief, unless an employer demonstrates that he is unable to reasonably accommodate [] an employee’s or prospective employee’s religious observance or practice without undue hardship on the conduct of the employer’s business.”

There are two ways to bring an action under Title VII of the Civil Rights Act of 1964: one is for a disparate- treatment (or intentional-discrimination), and the other, disparate-impact of otherwise facially neutral policies. The “intentional discrimination provision prohibits certain motives, regardless of the state of the actor’s knowledge.” Disparate-treatment claims based on a failure to accommodate a religious practice is plain: “An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.”

The Court ruled: “An employer is surely entitled to have, for example, a no-headwear policy as an ordinary matter. But when an applicant requires an accommodation as an ‘aspec[t] of religious . . . practice,’ it is no response that the subsequent ‘fail[ure] . . . to hire’ was due to an otherwise-neutral policy. Title VII requires otherwise-neutral policies to give way to the need for an accommodation.”

Under the ruling, a prospective applicant is not always required, as the Tenth Circuit held, to request an accommodation from an employer. Employers that are aware or believe an accommodation is needed and are motivated to fire or not to hire someone based on that accommodation also violate the statute. As Justice Alito stated in his concurrence, however, if it is unduly burdensome to require the accommodation, then there is no violation.

But Justice Thomas in his dissent was concerned about a broad reading of the words “because of such religious practice” in that it could sweep up an employer’s policy that applies indiscriminately to everyone, yet happens to be at odds with an employee’s religious practice. He gives the following example:

Suppose an employer with a neutral grooming policy forbidding facial hair refuses to hire a Muslim who wears a beard for religious reasons. Assuming the employer applied the neutral grooming policy to all applicants, the motivation behind the refusal to hire the Muslim appli- cant would not be the religious nature of his beard, but its existence. Under the first reading, then, the Muslim applicant would lack an intentional-discrimination claim, as he was not refused employment ‘because of’ the religious nature of his practice. But under the second reading, he would have such a claim, as he was refused employment ‘because of’ a practice that happens to be religious in nature.

Justice Thomas reasoned that under a broad reading employers with no discriminatory motive would be punished because they had no knowledge of every aspect of an employee’s religious practice. It would undermine the intent element of disparate treatment and make the employer strictly liable for its conduct. Citing precedent, Justice Thomas explained “discriminatory purpose” as “‘the purpose necessary for a claim of intentional discrimination” that “demands ‘more than . . . awareness of consequences. It implies that the decisionmaker . . . selected or reaffirmed a particular course of action at least in part ‘because of,’ not merely ‘in spite of,’ its adverse effects upon an identifiable group.’”

He recognized refusal to accommodate can be discriminatory where an employer does not make a policy exception for someone for religious purposes involving a store policy that is applied to everyone, when at the same time makes the same allowance for someone of another religion or some secular practice. Yet, he explained,”merely refusing to create an exception to a neutral policy for a religious practice cannot be described as treating a particular applicant ‘less favorably than others.’” Under the majority’s view “mere refusal to accommodate a religious practice under a neutral policy could constitute intentional discrimination,” unless the employer produces evidence that the accommodation is unduly burdensome and persuades the court that it is so.

Posted by Jellyn Anne Echon.

In a business, it’s important to be ethical and that includes treating your co-workers/employees with respect. Unfortunately, McDonalds failed to see that. The Virginia-based franchise of McDonalds was sued by 10 former employees for allegedly violating their civil rights. The article states that, “In a lawsuit filed in federal court, the plaintiffs allege that both McDonalds and one of its franchisees violated Title VII of the 1964 Civil Rights Act by subjecting employees to rampant racial and sexual harassment.” Title VII of the 1964 Civil Rights Act protects people against employment discrimination on the bases of race and color, along with national origin, sex, and religion.

According to the lawsuit, employees were called inappropriate names by managers as well as being sexually harassed. As far as race discrimination is concerned, according to the lawsuit, African American employees were disciplined for petty things before being fired shortly after, while the caucasian employees nearly got away with anything and were hired more. One of the plaintiffs, Katrina Stanfield, spoke about her experience and stated that, “Being a good worker didn’t matter. . . . I was fired for being black.”

In response, McDonald’s media hotline just states that,

We have not seen the lawsuit, and cannot comment on its allegations, but will review the matter carefully. . . . McDonald’s has a long-standing history of embracing the diversity of employees, independent franchisees, customers and suppliers, and discrimination is completely inconsistent with our values. McDonald’s and our independent owner-operators share a commitment to the well-being and fair treatment of all people who work in McDonald’s restaurants.

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

The United States Supreme Court granted certiorari in Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc.  Abercrombie allegedly denied a muslim woman a job at a Tulsa, Oklahoma store during an interview.  She was wearing a headscarf, which Abercrombie determined violated its “look policy.”  The “look policy” at the time was classic East Coast collegiate style.

The 10th Circuit Court of Appeals sided with Abercrombie ruling the muslim woman never indicated she needed a religious accommodation as required under federal law.  The EEOC argued Abercrombie was on notice that an accommodation was warranted because the woman was wearing the headscarf at the interview.

Under Title VII of the Civil Rights Act of 1964, a business operating with less than 15 employees (religious institutions exempted) must provide an accommodation for an employee’s religious observances, unless doing so is an undue burden for the company.  Examples of undue burdens could include, but are not limited to, costing the company more than ordinary administrative costs; workplace efficiency diminished in other areas of the business; infringing upon another employee’s job rights or benefits; impairing workplace safety; adding burdens on co-workers by forcing them to carry on the accommodated employee’s share of potentially hazardous or burdensome work; or conflicts with another law or regulation.

The High Court will decide the case next year.

Pension Holder Chaos

Posted by Kimberly McNamara.

The idea of pensions have been around for nearly 100 years. Detroit, a city that recently filed for bankruptcy, is now facing more monetary concerns, and many are looking for someone to blame. According to The New York Times, the city of “Detroit has been a client of Gabriel Roeder since 1938, when the city first started offering pensions. Now the city is bankrupt, the pension fund is short, benefits are being cut . . . .” Gabriel Roeder Smith & Company is a widely known, consultant and actuary firm dealing mostly with pension plans. This company was hired by the city of Detroit to calculate the amount of money coming in versus the amount of money needed for current and future pension pay-outs.

Many Detroit pension holders are now filing lawsuits against Gabriel Roeder. There are three current cases against Gabriel Roeder: one by members of Detroit’s police and firefighting force, another by Wayne County, and Ms. Estes, a citizen and pension holder in Detroit.

Now Ms. Estes has lost not only part of her pension but much of the savings tied up in her house, while she and her neighbors overpay for paltry city services. She says she might have been spared some of the misery had Gabriel Roeder warned the trustees years ago that the pension system was unsustainable and recommended changes.

Ms. Estes is just one of many who have been put in this situation created by poor business decisions. She was also told that, “she would have to forfeit $25,000 when she reaches retirement age . . . .” There are a multitude of people who had depended on their pension for retirement and simply will never see it.

Unfortunately, Gabriel Roeder would not exceptaccept the advice of other firms including government agencies like the Governmental Accounting Standards Board (G.A.S.B.). If they had, maybe Detroit’s bankruptcy situation would be different and quite possibly there would be no lawsuits being brought againstto Gabriel Roeder Smith & Company.   The firm said they “would vigorously defend itself against the lawsuits,” but lets wait and see how well that holds up in court.

Kimberly is a business major at Montclair State University, Class of 2016.

Home Warranty Companies Face Lawsuits

Posted by Da’Naysia Aarons.

In an article called, “Lawsuits and Consumer Reporters Fight Home Warranty Companies,” Heidi Turner discusses how home warranty companies are being sued by consumers. An investigative reporter was asked to look into a company called Sensible Home Warranty who was allegedly selling consumers a warranty policy. However, when one consumer asked for a new microwave, Sensible Home warranty refused to pay out her claim. While investigating the company, a reporter name Michelle Mortensen found that Sensible Home Warranty has more than 1,950 complaints. In the article it states, “An investigation into the company was undertaken by the Nevada Division of Insurance but in the meantime, the company reportedly went out of business.”

Due to the fact that the company was mistreating their consumers and taking advantage of their money, the company was fined $5,000 dollars for not complying with the state’s Service Warranty Act. In the article it further states, “The business failed to pay legitimate claims made on home warranty contracts sold in the State of Utah, or to pay them in a timely manner, and the business failed to respond to inquiries of the commissioner.”

Since many other home warranty companies have been taking advantage of other consumers, lawsuits have been filed against them.

Da’Naysia is an international business major at Montclair State University, Class of 2017.

The Ethical Battle of the Music Industry

Posted by Matthew Rachek.

One of the biggest issues that industries of all kinds deal with constantly is being able to filter out counterfeits from their marketplace. Counterfeits and other forms of knock-offs are not good for the market because they drive profits away from those that deserve the reward and often times fund criminal organizations.

The music industry has dealt with counterfeits since its existence. With the continued growth of technology and new ways for consumers to listen to their favorite artists, it has become harder and harder for the in the industry to regulate how the money is coming in. In fact often times, counterfeit CDs or knock-off streaming services do not compensate the artist at all.

In an article published in the Wall Street Journal on October 30, 2016, it explained how these music “pirates” have been flooding online retailers such as Amazon.com, “with counterfeit CDs that often cost nearly as much as the official versions and increasingly are difficult to distinguish from the real goods.”

The good news is that Amazon.com has recognized the problem an is making the right ethical decision by making sure that their stakeholders all receive the product they are expecting to receive at checkout. By doing this they are also trying to ensure that the artist and producer of the music receive proper compensation for their work so that the money does not make its way into the hands of the music pirates.

In a statement released by Amazon.com they wrote, “We are constantly innovating….to improve the ways we detect and prevent counterfeit products from reaching our marketplace. We work hard on this issue every day….” One of the ways they ensure that customers, a stakeholder, is satisfied with their product is by offering refunds for any product that is not as advertised. While this may initially hurt Amazon.com’s bottom line this is an essential moral decision because in the long-run consumers will be more likely to trust Amazon.com and buy other products off the site.

As technology continues to find new innovations it is almost certain that counterfeits and pirates will new be completely taken out of the market place, especially in the music industry. However it is very reassuring for a large company like Amazon to take nope of the issue and try to take steps to solve the issue.

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

Sources:

http://www.cbsnews.com/news/amazon-struggling-to-keep-counterfeits-off-market-retailer-says/

http://www.wsj.com/articles/boost-in-online-pirated-cd-sales-deal-another-blow-to-music-industry-1477867243