Posted by Gerald Wrona.

Interesting. That is one word to describe the NY Times report on the pre-trial proceedings of the Libyan Investment Authority’s (LIA) suit against Goldman Sachs (Anderson). Acting as broker-dealer to the sovereign wealth fund, Goldman established a relationship with the fund’s managers in 2007. A year later, Secretary of State Condoleezza Rice was visiting Moammar Gadhafi in Libya’s capital to devise a “trade and investment agreement . . . which will allow the improvement of the climate for investment.” (Labbott). Shortly after that promising convention between the two political heads, Goldman and the Authority finalized the agreement and the bank sold derivative products totaling $1 billion to the LIA. Then the housing market “opened its mouth” and out came the demon of the subprime mortgage crisis.

Understandably, the LIA felt exploited. They bit the bullet. Their lawyers came to the London High Court armed with notions that those managing the sovereign wealth fund were ineffectual in understanding the investments presented to them by Goldman. To add insult to insult, they further asserted that the fund administrators were altered in their judgment by Goldman representatives’ leadership role in incidents allegedly involving the recreational consumption of alcohol and visits paid to what may have been brothels, or some other manufacturer of night entertainment, though a witness statement does not specify. Considering that it would never have been in Goldman’s interest to spend more time carousing then working on the deal with the authority, it is highly unlikely that the time spent in leisure outweighed the hours dedicated to the investigation of the necessary facts of the deal.

Though it is worth noting that Goldman has already been ousted for luring investors into crummy deals and then betting against those deals to increase revenue. This is how Goldman actually made money off the subprime mortgage crisis (Cohan).

Will evidence be disclosed that suggests Goldman dealt with the LIA in a similar way? It’s impossible to know. I believe the judge will find that the heart of the matter is whether Goldman conducted due diligence in their dealing with the LIA. For that reason, Robert Miles, one of the attorney’s representing Goldman, would do well to look to the Securities Act of 1933 for support. It states: “If a Broker Dealer conducts reasonable due diligence on a security and passes the information on to the buyer before a transaction, the Broker cannot be held liable for non-disclosure of information that was not found during the investigation.”  Securities Act of 1933, SEC §§ 38-1-28 (SEC 1933).

The trial is expected to start next year.

Gerald is a Business Administration and MIT major at Montclair State University, class of 2017.

Posted by Patrick Osadebe 

Do you think the lawyers in America get paid as much as they deserve? How much do you think a lawyer makes in a year? According to a survey conducted in 2014 by the Association of Law Placement, the highest starting salary of one of the largest firm in the US with about 700 plus employee is $160,000. This number may seem to be high based on our present economy situations but the results are accurate.

From the survey, only 27% of firms actually responded and one third actually start their employees with $160,000. According to James Leiplod who is the current NALP executive director, he stated that “it is fair to say that law firm starting salaries are flat.” In contrast to that statement, the starting salaries was much higher before the economic recession and the figure is basically a reflection of changes in large firm market.

Different firms may have different starting salaries based on size and experience but according to the survey, the median starting salary is about $125,000, which has been unchanged since 2012.

Patrick is a business administration major with a concentration in finance at Montclair State University, Class of 2016.

Posted by Jessica Page.

In 2008 and 2009, there was a huge salmonella outbreak traced to peanut butter produced by the Peanut Corporation of America. Nine people died from this incident and 700 were reported ill. The $30 million company was shut down and liquidated after the incident and the CEO, Stewart Parnell, was indicted and prosecuted. In late September, he was sentenced 28 years in prison.

What’s intriguing about this article is the comparison to the GM faulty ignition case. In this particular incident, the defect caused 124 deaths and over 200 injuries. GM has recently settled for $900 million and a three year prosecution agreement. The major difference between the two cases though – indictment of employees. Preet Bharara, one of the best federal prosecutors in Manhattan, explained, “it is unusually difficult to prosecute auto industry executives” and because of the national auto safety laws, there is a call for punishing the corporation as a whole, rather than any one individual.

The main conviction in the salmonella case is the fact that Parnell committed fraud by “knowingly introducing tainted peanut butter paste into interstate commerce.” The fact of the matter is though, there were GM executives who knew about the faulty ignition but failed to report it within the five-day span. The company itself was fined as a corporation for this matter, but there was not specific indictment of GM executives. The real issue at hand is how much harder it is to prosecute auto executives when it comes to cases of product liability. There is currently a bill that many senators are working to pass that would make this process easier and hold executives accountable, if they were knowledgeable of the faulty auto product or provided false statements to consumers, as GM did. This could change future product liability cases within the auto industry and as Senator Blumenthal stated, “one sentence like Parnell’s [within the automotive industry] would change auto safety dramatically and enduringly.”

Jessica is a finance and marketing major at the Stillman School of Business, Seton Hall University, Class of 2016.

Posted by Shakil Rahman.

For a car to be eligible for sale, it has to pass various tests which are placed in order to make sure that the cars for safe for use by the customers. Certain improvements are made to cars to also make sure that during an accident, there are some protections for the customer inside the car. GM motors ignition switch for the some small cars in the late 1990s and early 2000s were defective and it would shut of the engine during driving and this also prevented from the airbags from deploying during a crash. While GM executives and engineers became aware of the defective ignition switch, they did not attempt to fix the problem as it was assessed to be too costly. But by 2012, it was discovered that the defective switch also prevented the air bags from deploying. GM did not disclose the safety hazard to its customers, which led to over 120 deaths and multiple injuries. In 2014, GM started recalling cars with faulty ignition switch in order to fix it, and after the recall, multiple customers filed lawsuits against GM for the injuries caused due to the defective ignition switch. Lawsuits were filed against GM for false advertising due to not disclosing the defect to customer before buying the product. GM came to a settlement with the customers and agreed to pay $575 Million as compensation and also paid $900 million pay to US.

There are various points of interest in the case that are related to corporate responsibility, advertisements and negligence. The lawsuits that were filed against General Motors were for false advertising, and for injuries caused from malfunctioning products created by General Motors. General Motors car’s ignition switch was faulty and therefore sometimes it would shut down the engine while driving and since the engine shut down, the air bags would not deploy during an accident. So the defective ignition switch would cause the car to shut down while driving and therefore causing car accidents and also the air bags would not be deployed which would lead to the injury from the crash to be amplified. Therefore, General Motors is liable for the injuries caused by the defect, because their product is directly causing the accidents and the injuries that are related to it.

The other portion of the lawsuits was about false advertisement by General Motors about their cars. General Motors did not know about their defective ignition switch before 2005 but decided to not recall the cars after a risk assessment about the expense that will needed to fix the ignition switch. Now even if they decided to stop selling cars with faulty ignition switch, they still did not make an effort to fix the ignition switch for cars that were already sold and also did not warn the customers about the product’s defect. This is not only false advertisement but also negligence because the customers were going to be harmed even after using the product as it was intended to be used. So in conclusion, General Motors was liable for the injuries that were caused by their defective products because they did not inform the customers about the hazard of using the product and also for not attempting to fix a defect that could injure the customers.

The irony of the whole situation is that General Motors decided not to recall the vehicles in 2005 to fix the defect because of the fact that they came to the conclusion that it would too expensive. And now in 2015, their insistence on not recalling the cars back for repairs back in 2005 has led to a federal fine of $900 million and settlements of $575 million for the customers who were injured due to the cars faulty switch.

In the business world, when a company is attempting to look at the direction the company is going they need to see how their actions might affect the company in the long term. While paying for the repairs in 2005 may have been expensive, right now they have paid around $2 billion dollars in fine and are predicted to pay around $2.7 billion for repairing the recalled cars. And on top of that, the break of trust between GM and the customers are surely going to affect the company’s progress and profit.

Shakil is a business student at the Stillman School of Business, Seton Hall University.

Posted by Daniel Szatkowski.

According to Chris Bruce in a Bloomberg article dated October 17, 2017, Wells Fargo was found charging costumers fees to lock interest rates on mortgages and other loans made with the bank. The lock rate fees earned by Wells Fargo are up to $98 million in the period of approximately four and half years ending February 2017. Wells Fargo incorrectly claims that their clients are behind and/or missing payments, which would lead to increased interest rates. Instead of increasing the rate, Wells Fargo tells them to pay rate-lock fees to keep the rate where it is.

The manner in which Wells Fargo is charging lock-rate fees is unethical. First of all, many of the Wells Fargo clients were not actually behind on their loan payments. According to Brian Brach and other mortgage applicants, “Wells Fargo employees wrongfully blamed customers for loan processing delays and made them pay fees to maintain a lock on interest rates that might otherwise expire.” The delays were caused by Wells Fargo, which triggered the rate-lock fees; therefore, no fees should have been issued to the clients.

Wells Fargo wanted to unethically increase their profit by charging these rate-lock fees even though they did not apply to the situation. The company’s reputation will drop due to the new unwanted press and the clients are putting Wells Fargo on trial. The first of the reimbursement will be sent out during the final quarter of this year.

Daniel is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2020.

Posted by Johnny A. Guerrero.

This article was published by the New York Times on 26 November 2017 and was written by Stacy Cowley.  The article illuminates the tension between a high-ranking government civil service official, Ms. Leandra English, and the President of the United States, Mr. Donald Trump.  To further understand this dilemma, one has to first comprehend what is “the Consumer Financial Protection Bureau” and what do they do.  For starters, the Consumer Financial Protection Bureau, “was created six years ago to oversee a wide variety of financial products, including mortgages, credit cards, bank accounts and student loans” (Cowley).  With this in mind, one can say that the bureau was a regulator created in the aftermath of the global financial crisis that hit the New York Stock Market Exchange harshly.  The “Regulatory Agency,” also referred to as (CFPB) was created by the Obama Administration to protect consumers from the tyrants of Wall Street.  Thus, the agency is charged with overseeing financial products and services, as noted.

The tension raised because Ms. English, the deputy director of the bureau, was not willing to step down from her post because she believed that the President could not fire or replace her.  So, she “filed a lawsuit late Sunday night on 26 November 2017 to block Mr. Trump’s choice of someone else from taking control of the agency on Monday morning, 27 November 2017” (Cowley).  Ms. English was defending her cause because Congress gave the agency infrequent independency and autonomy to protect it from political interference.  Thus, the bureau’s director “is one of the few federal officials the President cannot fire at will” (Cowley).  However, the President nominates the agency’s director, who is subject to the approval and confirmation of the United States Senate.  Ms. English was not nominated by former President Obama; she was appointed director by the agency itself because the director, Mr. Richard Cordray, brusquely stepped down on Friday 24 November 2017.

To add more fire to the already burning wood, Ms. English, a seasoned agency veteran who rose progressively through the agency’s ranks, was being replace by Mick Mulvaney, Mr. Trump’s budget director.  Paradoxically, Trump wanted someone who saw the bureau as “sad, sick, a joke” (Cowley), and who openly supported legislation to eliminate it, as the agency’s new director.  Ethically this is not right.  Why appoint someone who speaks harshly about the agency to be its head?  Mulvaney, a white-collar professional, many believed would undo what the bureau had achieved since its conception, which was to protect consumers from the abusive debt collectors and politics of Wall Street Financiers.  This notion becomes eloquent with Senator Dick Durbin’s, a Democrat from Illinois, metaphor: “Wall Street hates it (the Agency) like the devil hates holy water” (Battle for Control of Consumer Agency Heads to Court, New York Times Article).

However, even though one may think that the President’s choice is ludicrous, he as the Head of the United States Government has the authority to appoint whoever he wants as the head of any Federal Government Agency.  Ms. English did not have the grounds to veto the President’s decision; after all the actual director, Mr. Cordray, was the one who resigned.  Therefore, it is the President’s duty to appoint a new head leader for the agency.  The law regarding Presidential Nominees is clear, “not grey.”  One must hope that Mr. Mulvaney does a good job protecting the American People from the Wall Street Tyrants, as he swore to do.

Johnny is in the dual B.A/M.B.A program at the College of Arts and Sciences (political science, minor in history) and the Stillman School of Business (management and finance), Seton Hall University, Classes of 2018 and 2019.

Source:

Posted by Nicholas Lillig.

On October 20^th, a judge tossed out a $417 million jury award to a woman who claimed that she developed ovarian cancer by using Johnson & Johnson talcum-based powder for feminine hygiene. The lawsuit is continuing even after the woman, Eva Echeverria, has died. Her attorney released a statement saying, “We will continue to fight on behalf of all women who have been impacted by this dangerous product.” Under clear scrutiny for their product, Johnson & Johnson has most recently been hit with a multimillion-dollar jury verdict. Los Angeles County Superior Court Judge Maren Nelson granted the company’s request for a new trial, saying there were errors and jury misconduct in the previous trial that ended with the award two months ago.” She also ruled that there was not enough convincing evidence that Johnson & Johnson acted with malice and that the award for the damages was far too excessive. This was the fourth time that Johnson & Johnson had to go to court in order to address this matter.

The product, Johnson & Johnson’s Baby Powder, uses a talcum based powder in which is used to treat diaper rashes. It is commonly found in soap, antiperspirant, toothpaste, makeup and even bath bombs. Many people use this powder to fight inflammation on their skin or for personal hygiene. The reason as to why this company is brought under the microscope is to debate whether the talc based powder can cause ovarian cancer in women. There is evidence on both sides of the argument for how it can effectively cause ovarian cancer. A report that was released in May of 2016 determined that 63 percent of women with ovarian cancer had used talc. Another previous study reports, “In 1971, four OB/GYNs found talc particles in more than 75 percent of the ovarian tumors they investigated”. Scientific studies and the juries involved point to yes, this product is liable to cause ovarian cancer. Evidence against the case states that the exact relationship is unclear as tumors can develop regardless of whether talc is applied in the situation.

The issue is that for over 100 years, Johnson & Johnson has been marketing their baby powder to treat diaper rash and as a daily feminine hygiene product. In the most recent cases, juries are pointing towards the evidence that it does cause ovarian cancer. Eva Echeverria and her attorney believe Johnson & Johnson failed to warn the public about “talcum powders potential cancer risks”. A spokeswoman for J&J said, “Ovarian cancer is a devastating disease – but it is not caused by the cosmetic-grade talc we have used in Johnson’s Baby Powder for decades. The science is clear and we will continue to defend the safety of Johnson’s Baby Powder as we prepare for additional trials in the U.S.” The company has decided that it will continue to fight for their product in further trials.

Nicholas is a finance major at the Stillman School of Business, Seton Hall University, Class of 2020.

Sources:

Posted by Connor O’Reilly.

On October 15th California Governor Jerry Brown signed several employment related bills into effect. These bills have been crafted and designed to change laws regarding the state’s employers. “The newly-enacted laws address a range of topics, including criminal conviction history, salary history and sanctuary immigration policy.”

The governor’s first major law bans inquiries regarding salary history when applying for a new job. “California will now prohibit all employers from inquiring about or relying upon salary history information of an applicant as a factor in determining whether to offer employment or an applicant’s salary.” This law was created in order to deter pay inequalities in regards to gender, race and ethnicity. This bill adds a completely new section to the Labor Code which applies to employers on both a state and federal level.

Next, California just passed a “Ban the Box” law which prohibits pre-application questioning regarding criminal records. In an effort to thwart discrimination and promote equal opportunity employment, “California will now prohibit all employers with five or more employees from inquiring into or relying upon an applicant’s criminal conviction history until an applicant has received a conditional offer of employment.” Further, if an applicant has a criminal record, employers are required to conduct individualized assessments on the conviction history including severity of the offense, the time that has passed and the nature of position sought. Their decision must be calculated, explained to the applicant, and be in compliance with California’s Fair Pay Act.

Additionally, California now declares itself a Sanctuary State and will prohibit employers’ compliance with newly passed federal immigration laws. This controversial law makes it illegal for employers to voluntarily permit federal immigration agents from searching private workplaces without a warrant. There are also several other regulations regarding time requirements before searches and harder requirements to obtain Employment Eligibility Verification from already employed workers. The penalties are extremely harsh for disregarding these laws which range from $2,000 to $10,000.

Without a doubt, California is creating laws that give more power and rights to workers. By eliminating salary history in the application process, each applicant will be given a salary solely based on their skills. California’s “Ban the Box” laws also promote equality in hiring and negate discrimination towards people with criminal records. Yet the new law prohibiting businesses from complying with Federal laws is extremely concerning and shocking. This is clearly a backlash at President Trump and his harsh crackdown on illegal immigrants, yet it will prove to be very taxing on the business owners of California. Overall, I believe California is creating important laws to give rights back to the working class, but creating laws that go against federal law will cause issues down the road.

Connor is an business administration major at the Stillman School of Business, Seton Hall University, Class of 2020.

Source:

https://www.natlawreview.com/article/recent-deluge-california-legislation-imposes-new-requirements-employers

Posted by Charles Bond.

My article is about the people who feed millions of Americans, farmers. Specifically, a ruling the USDA first tried to implement, but then decided to rescind. This ruling would have offered more protection for farmers who raise cows, pigs, and chickens for the largest meat producers in the United States. The USDA’s plan would have made it easier for farmers to sue those meat producers they are in contract with for unfair, discriminatory, or deceptive practices. This was a policy that was set to be enacted at the end of the Obama Administration but was put on hold until the Trump Administration took over; the USDA under the new administration decided to drop it. “Currently, several court rulings have interpreted federal law as saying a farmer must prove a company’s action harm competition in the entire industry before a lawsuit can move forward.” The farmer’s cannot just say they believe a company is aiming to cause harm; they must prove the company said this was their intent.  Passing the new rule would ease the burden of finding proof.

This new rule would have been extremely beneficial for chicken and pork farmers. “Chicken and pork producers must enter long-term contracts with companies like Tyson Foods and Pilgrim’s Pride that farmers allege lock them into deals that fix their compensation at unprofitably low levels and forces them deeply into debt.” Farmers are unaware of the repercussions of these deals until it is too late to do anything about them. The National Chicken Council President was strongly against this rule and thought the rule would have “opened the floodgates to frivolous and costly litigation.” Politicians are split on the ruling. Senator Pat Roberts was pleased with the rule being dropped stating, “It demonstrates the Trump administration’s commitment to promoting economic prosperity and reducing regulatory burdens in rural America.” Meanwhile Senator Charles Grassley criticized the rule being shot down saying ,“The USDA is the U.S. Department of Agriculture, not the U.S. Department of Big Agribusiness.”

This is a complicated issue, with reasonable arguments on both sides. However, it seems unreasonable not to have this rule. It is proven that meat producers exploit farmers across the board just so they can maximize profit and keep the farmers reliant on them for business. An argument made against the rule was that it opens the floodgate for farmers to bring cases against the companies, whether they have sufficient evidence or not. If the companies really were doing no wrong than they would not care because the cases would always go there way and secondly the ruling is only being implemented because so many farmers are claiming the companies are doing wrong and they have means to bring them to court. It really is a dicey issue, but ultimately the farmers should be allowed to take the companies court and have the law settle the disagreement.

Charles is a sports management major at the Stillman School of Business, Seton Hall University, Class of 2020.

Source:

https://www.nytimes.com/aponline/2017/10/18/us/ap-us-farm-rules.html

Posted by Justin Trigg.

Northern California homeowners have filed a lawsuit against Pacific Gas & Electric Co. for failing to sufficiently protect power lines before the region’s deadly wildfires. The homeowners Wayne and Jennifer Harvell argue, “[the] drought-like conditions over the summer put fire dangers ‘at an extraordinarily high level’, the homeowners are claiming PG&E failed to trim and remove vegetation within close proximity of power lines.” The California Department of Forestry and Fire Protection are actively “investigating the power lines and equipment as a possible cause of the fires that have killed at least 41 people and destroyed 6,000 homes.”

If the state, fire investigators determine the utility’s equipment as a possible cause, then the California Public Utilities Commission, who regulates PG&E, investigates the issue. In recent years, PG&E has been fined “$8.3 million for failing to maintain a power line that sparked a massive blaze in Northern California that destroyed 549 homes and killed two people” and “$1.6 billion for [a] 2010 natural gas explosion in the San Francisco Bay Area city of San Bruno that killed eight people and destroyed 38 homes”. Moreover, PG&E has reported to state regulators of several accounts of damages to its equipment. However, the report failed to acknowledge whether they might have caused the fire.

In my opinion, because of the evidence of PG&E’s failures to maintain their equipment from causing destruction and damage in recent years, they must increase their efforts to sustain their equipment in order to avoid these tragedies. Meanwhile, California homeowners, who appear to be aware of the danger of vegetation growing close to power lines, must alert the proper authorities to trim and cut down these hazards. With an increased effort from both parties, perhaps the degree of severity from these reoccurring California wildfires can be lessened.

A day following the lawsuit, United States Senators Dianne Feinstein and Kamala Harris of California wrote the Federal Communications Commission expressing their concern of the federal government’s failure, “to adopt rules that would require wireless carriers to more precisely target neighborhoods with orders to evacuate”. This regulation would certainly benefit the residents of neighborhoods in imminent risk, while evading alerting residents, who are in safe areas. The Senators argue, “These emergency services are caught in a bind between notifying individuals in imminent danger and risking mass panic”.

Justin is an accounting and finance major at the Stillman School of Business, Seton Hall University, Class of 2020. 

Source: http://news.findlaw.com/apnews/b98b3394040d470aa6db2afbdb2ea4dd

Posted by Randy Gomez.

In Business Law class, I learned about business ethics and how an entity should behave as a good citizen. In this article that I found online, it explains how the Federal Communications Commission fined AT&T 100 million dollars for slowing down data speeds to some customers. According to the FCC, AT&T violated a transparency rule by misleading customers saying that their plans were unlimited, when there was a maximum speed that customers would receive. AT&T is accused of not sufficiently informing its subscribers. The FCC chairman Tom Wheeler said “consumers deserve to get what they paid for,” and that, “[b]roadband providers must be upfront and transparent about the services they provide.”

It seems that the corporation was trying to maximize their short-term profits, by not being clear enough about the services provided to the consumer. As it usually happens when a corporation acts unethically to increase their profits, AT&T hurt their profits and now is receiving bad publicity. This is a great example of why companies have to take in consideration moral and ethical principles toward their decisions, instead of just trying to maximize profits.

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

Posted by Abier Mustafa.

Cell phone Company, AT&T, has agreed to pay back $105 million in what is being called ”the largest cramming settlement in history.” AT&T has been adding unauthorized charges to tens of thousands of customers’ monthly bills. The charges are usually for the amount of $9.99 per month, coming from third-party services, including trivia, horoscopes, and love tips.  ”AT&T is accused of keeping at least 35% of the fees, as well as obscuring the charges on bills and preventing customers from securing full refunds.”

There have been previous lawsuits against other cell phone providers besides AT&T.  For example, the Federal Trade Commission has filed a similar lawsuit against T-Mobile in the past also due to unethical charges to customers.  “For too long, consumers have been charged on their phone bills for things they did not buy,” Wheeler, the Federal Communications Commission chairman, said- “It’s estimated that 20 million consumers this year are caught in this kind of trap, costing hundreds of millions of dollars.”

AT&T has released a statement saying that they have provided customers with “Premium Short Messaging Services” in the past. However, they have discontinued third-party billing.  To resolve all claims, $80 million of the settlement has been set aside for customer refunds, along with $25 million in penalties due to regulators.

So if you’re an AT&T customer and have been wrongfully charged, you may be eligible for a refund!

Abier is a finance major at Montclair State University, Class of 2016.