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
Posted by Deane Franco.
In a recent article posted in the Wall Street Journal, I read about General Motors being charged with punitive damages due to a defective part causing multiple deaths. General motors had been in the process of recalling millions of vehicles, when a defective ignition switch caused 100 or so deaths.
The punitive damages will be limited to the extent of a lawsuit based on claims and knowledge that GM had of a new company auto maker’s 2009 restructuring. GM attempted to prevent plaintiffs for bringing punitive damages based on personal injury or wrongful death. Unfortunately for GM, Robert Hilliard who is representing all those injured by GM feels that punitive damages “are the only way to properly compensate victims who have been harmed by defect.” This is because punitive damages are meant to be a large enough punishment to the corporation to send a notable message with the intent of assuring the corporation understands its wrong doing.
Although GM tried to fight the punitive damages, the plaintiffs won outright. What this means for GM is that punitive damages could reach millions or even billions of dollars awarded to those affected, depending on the ruling, previous defective GM part cases may also be included.
GM has already paid $935 million in damages and has also agreed to $625 million in compensation for the victims. But we will see if the court will stop there. Moreover, GM is being considered for additional charges because they had acknowledged that they mislead regulators about the defective car parts and still put them into production. The hairy part, however, comes in when GM addresses their bankruptcy filing, because technically, “Old GM” filed for bankruptcy and would be responsible for all these defective parts liabilities and, “New GM,” the product of the bankruptcy reorganization, is a new company separate from the actions of the old.
This article relates to the discussion post this week in class where we discussed the hot coffee spill in Liebeck vs. McDonalds. In that situation, punitive damages were used not necessarily as a fair compensation to the victim, but to ensure McDonald’s knew of its intentional wrong doing and would be more likely to halt such procedures.
The pricing of the punitive damages was said to be very important for Mr. Hillard because he knows that those damages tend to run very high and would lead to fair compensation for the victim’s losses. This is a little different from the Liebeck case, because in that case, there appeared to be dual responsibility as to both the temperature and the spilling of coffee; in this GM case, all responsibility falls on the manufacturer for selling a defective car which caused death to numerous victims. It does not matter that GM has rebranded itself after going through bankruptcy filings. At this point in time, there may be products on the market that have not been recalled, which caused injury and or death to numerous victims. For these reasons, the punitive damages should be high to balance out the victim’s loss and GM’s punishment.
Deane is a member of the The Gerald P. Buccino ’63 Center for Leadership Development at the Stillman School of Business, Seton Hall University, and a finance and information technology management major, Class of 2018.
Posted by Deane Franco.
While reading the Wall Street Journal, I found an article that deals with insider trading and why certain charges were being dropped. A year ago, SAC agreed to plead guilty to securities fraud and wire fraud and pay a $1.8 billion penalty and take responsibility for the actions of their employees, including Mr. Steinberg. Mr. Steinberg is a senior employee at SAC Capital Advisors LP who was charged with insider trading, along with 6 other analysts. The charges has since been dropped because Prosecutor Mr. Bharara said holding the accused any longer would be a form of injustice, since no information can be found incriminating the accused on their chargers. Before this came to light there were a few preceding facts. First, SAC’s founder Mr. Cohen has been on the radar of the SEC for years, as they try and gather proof that he used insider trading to boost his success. Also, Mr. Steinberg is a confidant to SAC founder Mr. Cohen, so this might have been the prosecutor’s way into discovering information about Mr. Cohen. Whatever the reason may be, after the public attention SAC Capital Advisors LP has now rebranded itself to be Point72 Asset Management LP. With all these facts being known, Mr. Bharara has still dismissed the charges against Mr. Steinberg and the case is currently in the process of being assessed by the SEC to see if they will accept the dismissal.
This case raises huge ethical flags to me because although prosecutors have not found any evidence to charge SAC capital Advisors with penalties, I think all its actions to this point have proven him guilty. A company has a moral duty to take responsibility for the actions of its employees as its own wrong doing. For that reason, employees conducting insider trading means the company also conducts insider trading and should be penalized for such. SAC Capital Advisors felt the heat of the media and SEC pressure to the point where they “rebranded” themselves as a new company, and now only manage Mr. Cohen’s fortune and no outside clients. An innocent company has no reason to hide behind the act of rebranding if their company truly acted in an ethical way. I would be curious to see if the SEC turns up any wire fraud charges or some procedural error in the way SAC Capital Advisors conducted their insider trading business.
The reason why I think insider trading and other illegal investment activities like this should be penalized harshly is because the educated few, take nonpublic information to give themselves an advantage that will take advantage of those who know less about the markets. When it comes to investing, investors should feel safe that they have received adequate information to make an informed decision that could eventually lead to a return on their investment. These dishonest acts in trading tip the scale to make investors not feel secure and confident that their money will not be consumed by a cheating wealthy party; and then who really loses when investors stop investing? I understand that so far, no evidence has risen to provide factual evidence of wrong doing, but there must be some leadership member of SAC who will own up to SAC’s ethical responsibility to society.
Deane is a finance and information technology management major at the Stillman School of Business, Seton Hall University, Class of 2018.
Healthcare providers, small business, and individuals have filed antitrust lawsuits against Blue Cross and Blue Shield. They allege the 37 independently-owned companies that make up the Blue Cross Blue Shield Association are colluding to avoid competition, raise prices on premiums, and clamp down on payments to providers. Plaintiffs are seeking class action status.
Blue Cross and Blue Shield covers about a third of the nation. In the 1930s, doctors provided insurance under the Blue Shield name and hospitals used Blue Cross. Eventually, the names were trademarked and now companies that use the names operate within an exclusive territory–many in a single state.
According to a Wall Street Journal article, defendant says “its licensing deals simply codify trademark rights that date back decades and ‘do not constitute an agreement to do anything unlawful.’” They claim their model has been around for long time and has withstood government scrutiny. But plaintiffs contend this is cartel-like behavior. The model stifles competition and leads to inflated premiums.
The case will pit antitrust law against trademark rights. Plaintiffs may have a point, especially since at least in one area, California, Blue Cross and Blue Shield plans “compete directly against one another . . . where Anthem Blue Cross battles Blue Shield of California.” That fact appears to cut against defendants’ contention that the deals among licensees are only made to protect trademarks.
A district court judge has declined to dismiss the case, ruling plaintiffs “‘have alleged a viable market-allocation scheme.’”
Posted by Ovais Ahmed.
An article posted by the Wall Street Journal talks about the time it takes for high courts to actually hear a case. The average time runs around 6 years, and since 2009 that time period has been extended. There has been a case involving two businesses that are battling about who gets trademarks rights to screws they use. The article states,
The Supreme Court on Tuesday will consider a business battle over trademark rights for screws that has been in the courts for more than 16 years, an extreme example of how cases headed for the high court can be matters of endurance. . . . The average age for a high court case is nearly six years, but 37% of cases have taken longer since 2009. In most circumstances a case can spend at least three to four years in the courts before resulting in a high-court ruling.
The process to get a case heard at the high court is a true test of endurance, and the willingness to wait the time period in order to get the issue resolved in these courts.
The cost of legal fees overtime can add up to high numbers, and is one of the reasons people involved in the case can get emotional. The article states, “ Given the time and money litigants put into cases, emotions can run high by the time the Supreme Court gets involved. That is true in the long-running trademark case before the court this week.” There isn’t a specific reason that cases take so long to be heard in the Supreme Court, but it’s just that some rulings for appeals happen to take a while. Criminal cases are considered more important, and so if a civil case arises during the same time as a criminal matter, the civil case will have to wait.
The Supreme Court only sits 9 times out of the year, and if a case lands on the right timing of when the court sits, that case is likely to be heard quicker than if it landed during off season. If one needs a case to be heard in Supreme Court, I suggest he or she has the time, money, and endurance to wait his or her turn.
Ovais is a business administration major with a concentration in management at Montclair State University, Class of 2015.
Posted by Nicholas Andreula.
Three major U.S firms along with one German company are currently being investigated for possible price manipulation. “Goldman Sachs Group Inc., HSBC Holdings PLC, Standard Bank Group Ltd. and a German chemical maker” are being accused of working together in “manipulating platinum and palladium prices.” It is believed that this price manipulation has been going on for many years and has had a considerable impact on investors and individuals within the industry.
“Modern Settings filed the suit as a class action on Tuesday,” with what the firm believes to be substantial evidence in support of the case. This incident has caused a great deal of speculation regarding “price rigging” both within and in other unrelated industries. Companies such as Modern Settings are requesting the implementation of regulations to prevent similar incidences from happening in the future.
The firms involved have “refused to comment on the lawsuit when contacted by the Wall Street Journal.” Although the case has initiated the investigation of price manipulation within the industry, many believe that the “the changes have come too late.”
Nicholas is a business administration major with a concentration in finance at Montclair State University, Class of 2016.