Category Archives: Finance

Law vs. Ethics: A Snatched Bar Mitzvah Gift, A Leaky AG, An Embarrassing Scoreboard, and”OINK”

Oink

I try to keep my legal ethics seminars up-to-the-minute, so while preparing for yesterday’s session with the Appellate Section of the Indiana Bar, I came across a bunch of entertaining stories in which the ethics were a lot clearer than the law, or vice-versa. All of them could and perhaps should sustain separate posts; indeed, I could probably devote the blog entirely to such cases.

Here are my four favorites from the past week’s legal news, involving a mother-son lawsuit, a brazenly unethical attorney general, a college scoreboard named after a crook, and police officer’s sense of humor: Continue reading

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Filed under Business & Commercial, Character, Ethics Alarms Award Nominee, Ethics Dunces, Family, Finance, Government & Politics, Humor and Satire, Journalism & Media, Law & Law Enforcement, Marketing and Advertising, Professions, Rights, Sports, U.S. Society

The Next Time You See One Of Those Opera Commercials About Selling Structured Settlements, Think About “Rose”

Rose

Because I worked as the general counsel for the late Richard Halpern, a kind and brilliant man, I know a lot about structured settlement, and also about the slimy businesses that conspire to destroy them. Richard’s company, The Halpern Group, worked with trial lawyers to develop structured settlements for successful plaintiffs who had won long-term damages for catastrophic injuries due to medical negligence, product liability or other torts. Most of these clients were poor, and if their millions in damages, designed to help them survive the rest of their lives, were awarded in lump sums, the result would almost always be catastrophic. These were poor people, for the most part, with poor families and poor friends and neighbors, none of whom had any experience or success managing money.  Drop millions on someone who has never had luxuries of any kind, and a spending spree as well and handouts to needy or greedy friends and acquaintances were sure to follow. For their own protection (or the protection of minors needing lifetime medical care), these plaintiffs of Rich’s lawyer clients were advised to forgo a big lump sum in favor of an annuity which would pay out regular amounts over time.

The plaintiffs own the income stream, but not the annuity itself. With assured income developed according to projected needs, the plaintiffs and their families could be assured of security and relative comfort and well-being—relative, because damages can seldom make up for broken bodies, minds and lives. Let me take over for myself here, from a post I wrote on this topic almost exactly six years ago.

Once they are on their own, however, the compensated victims are targeted by viatical settlement companies, both those with cute opera-singing commercials and those without. They undermine the sound advice of the attorneys with slogans like “It’s your money!” and try to persuade the former plaintiffs to unstructure the structured settlement by selling the annuity’s income stream to the viatical settlement company at a deep discount. Result: the annuity company gets the regular income at bargain rates, and the victims get a new, smaller lump sum to dissipate in exchange. The statistics say that the customer of the viatical settlement company will run out of cash long before he or she runs out of the need for it. But for the company, it’s a sweet deal.

It’s also despicable. The viatical settlement industry like to use lottery winnings, which are usually paid out in annuities like structured settlements, to justify their business. Lottery winning are windfall funds; while the same dissipation  hold for those lump sums (most multi-million dollar lottery winners have no money left after five years), the winners are usually no worse of after the money has been blown than they were before their number came up. When the money is a settlement for an injury, however, losing it is calamity. I would consider a viatical settlement company that only bought the income stream from lottery annuities ethical. There is no such company, however. The victims with structured settlements are a much larger and more lucrative market.

I have written about these legal but unethical businesses more than once. The first time, on The Ethics Scoreboard, I described a viatical settlement company only by using quotes from its own website, and explained what it meant, accurately. The company’s lawyers demanded that I take down the post, claiming that I had disparaged them (by using their own words and making it clear how they made their money.) I was in no position, with a family, a struggling business and aging parents, to engage in a legal battle of principle (though I suspected the company was bluffing, and I didn’t know Ken White and Marc Randazza then, both courageous blogging lawyers who assist bloggers who are threatened, like I was being threatened, to silence them. I took down the post. Continue reading

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Out Of 199 Quotes, 40 That Reveal Donald Trump’s Ethics

Slogging through 199 Donald Trump quotes is too much for anyone to endure. Here are the 40 that matter...

Slogging through 199 Donald Trump quotes is too much for anyone to endure. Here are 40 that matter…

I don’t like or trust the technique of cherry-picking quotes from famous people to make them sound stupid, venal, mean or distasteful. First of all, the technique has been  abused by the news media, which uses it against people like Sarah Palin and Dan Quayle, but seldom digs up quotes to embarrass the leaders and political figures they like and support. Many liberal icons—Barney Frank comes to mind—talk so incessantly that it would be easy to make them sound like monsters or fools using the technique, but if it is done to these people at all, it is done by ideological blogs with minimal exposure. Second, those who make such lists often cheat, taking quotes out of context, or worse, making them up. Many lists designed to show that Sarah Palin is an idiot, for example (she is many things, but idiot is not among them) use lines actually said by Tina Fay while lampooning Palin.

Michael Kruse’s feature for Politico called “The 199 Most Donald Trump Things Donald Trump Has Ever Said”, however, deserves a bit more deference. After all, he appears to have waded through a putrid swamp of Trump interviews, books, and videos, which probably left him drooling and giggling in a corner some place; I’ll be relieved when I see evidence that he’s OK. That task took courage, dedication and endurance: attention must be paid. Moreover, this isn’t the usual list of ten or twenty quotes: you could make Stephen Hawking  seem like a dolt in twenty quotes if you chose them maliciously. This is 199. Impressive.

Also horrifying. In selecting the 199 juiciest and most provocative quotes from any prominent American, wouldn’t you expect at least one that was articulate, thoughtful, wise or memorable? I’m not looking for Samuel Butler here, or even Barack Obama, but for someone who is at least for the nonce a “serious” candidate for the highest office in the land, it would be reassuring to find some evidence of wit, perspective, reflection, or a vocabulary beyond that of a typical 8th grader, and it just isn’t there. Has Trump  read any literature? Has he ever seen a play? Is he capable of a relevant famous quote or a cultural reference (saying that Bette Midler is “grotesque” doesn’t count, though “grotesque” may be the most sophisticated word that appears on the list)? If so, there is no hint of it. Maybe Kruse intentionally left out quotes that would reflect well on Trump, and omitted utterances like “I suppose there’s a melancholy tone at the back of the American mind, a sense of something lost. And it’s the lost world of Thomas Jefferson. It is the lost sense of innocence that we could live with a very minimal state, with a vast sense of space in which to work out freedom” (George Will) or “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators” (P.J. O’Roarke) or even“Our political differences, now matter how sharply they are debated, are really quite narrow in comparison to the remarkably durable national consensus on our founding convictions.” (John McCain). I doubt it.

There are three Trump bon mots in the 199 that barely justify quoting, like  #57: Continue reading

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Further Thoughts And Questions On “The Lottery Winner’s Sister-in-Law” (Part 2)

Money-box-gift

As promised, here are some proposed lines regarding the ethics quiz on the lottery-enriched brother and whether his financially-challenged sibling  should ask for a cut—and had a right to expect one. (Part 1 of the “Further Thoughts” is here)

All of the following assume that the lottery-winner does not have a personal emergency or crisis of his own that would require him to spend all or most of the money.

1. The wealthy brother is ethically obligated to offer financial assistance, if he can afford it without excessive hardship, without being asked, if his brother or his brother’s family is facing a health crisis of other catastrophe.

This is true regardless of whether his new financial resources come from luck, planning, work or skill, and regardless of how much money he has. Offering a loan rather than a gift is still fair and ethical. Charging interest under these circumstances is not, unless the poor brother has a record of not paying back earlier loans.

Possible exceptions: Continue reading

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Ethics Quiz: The Lottery Winner’s Sister-in-Law

_rich_man_poor_man“Dear Prudence” (a.k.a Emily Yoffe), my least favorite advice columnist (who answers weird questions from weird people at Slate), received an ethics quiz worthy query from a woman whose husband has had some business reverses and now, as he near retirement age, is looking at two jobs and tarnished golden years without a pension or vacations. Meanwhile, her husband’s brother (let’s assume this is true: it sounds like a hypothetical to me) won 50 million bucks in the lottery a few years ago, and is having a ball. The two brothers are on good terms and speak often. She asks,

“What I don’t understand is how he can stand to see his little brother so stressed and working so hard while he has more money than he could spend in a dozen lifetimes. Obviously he is under no obligation, but he does not seem to realize how hard it is to see how he spends his money on travel and amusements. I think he should help his brother out. What do you think?”

Prudence  thinks the poor brother should ask the rich brother for money, and that if he won’t, the wife of the poor brother should: Continue reading

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The Dishonest And Irresponsible Minimum Wage Issue.

Good bye. I know when I'm licked...

Good bye. I know when I’m licked…

I heard Bernie Sanders make another one of his economically-deranged statements as the crowd cheered, this one about how no American should work 40 hours a week and not have enough to live on. Then I went to the local Baskin-Robbins.

I ordered a single scoop of Chocolate Mousse Royale in a waffle cone. The cost was…$4.68.

For a single-scoop ice cream cone.

I will not go back to Baskin-Robbins again, which means I may have had my last ice cream cone. I also cannot believe that the company can continue selling ice cream cones at such absurd prices. When I worked for Baskin-Robbins as a summer job, a single-scoop cone cost $.29, and no, dinosaurs were not roaming the earth. I was paid the minimum wage, because a moron can do that job and you get to eat all the ice cream you want (within limits, which I thoroughly explored.)

Like most minimum wage jobs, scooping ice cream is overwhelmingly one filled by the young, who do not need a living wage, or those who have no skills or experience whatsoever and need to develop some. When the minimum wage goes up, companies eliminate jobs, and when it goes  up too much too fast, whole occupations and companies disappear. This isn’t capitalist propaganda: it’s true. Most of the jobs that disappear are those that make life a little more pleasant for those not doing them, like pumping gas, ushering in movie theaters, operating elevators, waiting on tables, and scooping ice cream, jobs that can be learned in about an hour or less by anyone with an IQ hovering around 90. Continue reading

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Ethics Over Compliance: The Dutch Banker’s Oath

bankers oath

“Professional ethics” is a never-ending battle between compliance and ethics, between rules and penalties on one side, and principles and values on the other. Compliance is easier: all you do is tell people with rules and regulations what they must or can’t do, and promise that there will be consequences if those rules are violated. For ethics to work, people actually have to understand ethical values and be committed to living by them in a professional context.

Compliance has little to do with ethics. Jack the Ripper will follow rules if they are clear, if he knows he’ll get caught if he violates them, and if the punishment when he does will be  harsh enough. That won’t make him ethical. In fact, compliance–rules-based professional conduct control—is often antithetical to ethics. Rules and laws are merely a challenge to the type that Oliver Wendell Holmes called “The Bad Man”-–which includes bad women—to find ways to do things that are wrong but that avoid violating rules sufficiently to justify punishment.  This is why most compliance codes have language in their introductions noting that it’s impossible to make a code that will cover every wrong someone can think of, so ethics are important too.

Pure compliance-based systems don’t improve ethical conduct. The financial collapse in 2008 was largely caused by financial manipulators operating in the grey areas of the rules and laws—that’s why so few of them could be prosecuted. In politics, The compliance mindset is extremely convenient for clever liars and cheats like the Clintons, which is why Hillary could try to explain her e-mail shenanigans by saying that “I fully complied with every rule I was governed by (heh-heh-heh!).” Unethical people will always find ways to get around rules. Ethical people, in contrast, barely need rules at all.

Another benefit of ethics over compliance is that ethics rules–compliance codes—have to be long and detailed, otherwise it’s too easy for Clinton-types to find loopholes, though they usually will find some anyway. Ethical values, on the other hand, can be stated very simply. An ethical employer thinks, “Hmm, that intern is cute, but I am married and have duties of loyalty and honesty to my wife and family, and it would be an abuse of power and influence as well as irresponsible for me as a leader to have an affair with someone under my supervision in the organization.” The Bad Man thinks, “Wow, she’s hot; my wife won’t care as long as I’m not caught; getting a hummer isn’t considered sex where I come from, and there’s nothing that says a President can’t fool around!” For the former, “A leader should not have sex with subordinates” is clear as a bell; his values tell him why. The latter, though, is thinking, “Hmmm. How can I get around this? That rule says “should” but not “shall”— that’s good. No punishment is specified. Sounds like more of a guideline than a rule. “Sex”—that must mean sexual intercourse: great! Lots of wiggle room there. And “subordinate”—is an intern really a subordinate? And I bet I could argue that this is personal, not official conduct. All good…now where’s that cigar?

Invoking ethics rather than compliance is a new oath required by the Dutch Bankers Association. It could be printed on a postcard, and if a banker is ethical, it is all he or she needs:

I swear within the boundaries of the position that I hold in the banking sector…

…that I will perform my duties with integrity and care;

…that I will carefully balance all the interests involved in the enterprise, namely those of customers, shareholders, employees and the society in which the bank operates;

…that in this balancing, I will put the interests of the customer first;

…that I will behave in accordance with the laws, regulations and codes of conduct that apply to me;

…that I will keep the secrets entrusted to me;

…that I will make no misuse of my banking knowledge;

…that I will be open and transparent, and am aware of my responsibility to society;

…that I will endeavor to maintain and promote confidence in the banking system.

So truly help me God.

And if a banker isn’t ethical,

it won’t matter anyway.

__________________________

Pointer: Legal Ethics Forum

Sources: Bloomberg, The Conglomerate

Graphic: Bloomberg

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