Business And Professional Ethics, 7th Edition Solution Manual

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Business & Professional Ethicsfor Directors, Executives &Accountants,7eChapter 1–Ethics ExpectationsChapter Questions and Case SolutionsChapterQuestions..................................................................2Case Solutions.........................................................................5

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Chapter Questions1.Why have concerns over pollution become so important formanagement and Directors?Because the public perceive that our environment is finite and that our well-being isthreatened. In turn they have influenced politicians to enact tougher laws and heavierpenalties... up to $2 million/day, with the prospect of personal liability and jail. Inaddition, U.S. courts have agreed to hear lawsuits brought by foreigners for pollution onforeign soil (see Texaco: The Ecuador Issue). Finally, pollution can erode the trustnecessary to preserve stakeholder support, and this will be seen by stakeholders withnegative consequences in consumer and capital markets.2.Why are we more concerned now than our parents were about fair treatment of employees?Our social consciousness is higher due to the reasons listed inCh. 1.3.What could professional accountants have done to prevent the development of the credibilitygap and the expectations gap?See the discussion on the Treadway, Metcalf and Macdonald Commissions. Also seeArthur Andersen’s Troubles case in Chapter 2.4.Why might ethical corporate behavior lead to higher profitability?Because attention to ethical concerns can keep corporations out of costly problems suchas clean-up of pollution problems, fines, low morale, and loss of reputation andstakeholder support; and it can open up profitable opportunities such as developinggreen product lines.5.Why is it important for the clients of professional accountants to be ethical?Because auditors don't check 100% of all transactions, and even if they did there wouldbe conflicts of interest and other hidden issues which would be found only by fluke,making sure that clients are ethical provides assurance that they will not be hidingthings from the auditors or engaging in unethical activities. The value of the auditor'sopinion depends upon it.6.How can corporations ensure that their employees behave ethically?By developing ethical corporate cultures based codes of conduct in place to provideguidance, training to provide awareness, understanding, monitoring to assurecompliance, and rewards or sanctions to reinforce the desired behavior. Also, the topexecutives should set the best example possible.7.Should executives and Directors be sent to jail for the acts of their corporation's employees?Yes, if they executives and Directors act negligently or without engaging in due diligenceprocedures which are designed to ensure that reasonable and proper actions are taken.8.Why are the expectations of a corporation’s stakeholders important to the reputation of thecorporation and to its profitability?

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Without the support of key or primary stakeholders such as customers and employeesthe sustained profitability is not possible. A corporation’s reputation is based on theelements that such stakeholders find relevant to their support, including: credibility,reliability, trustworthiness and the taking of responsibility.9.How can a corporation show respect for its stakeholders?By taking their interests into account (respecting them) when making decisions.10.How can conflicts of interest between stakeholders be resolved by a corporation’smanagement?By displaying sensitivity to each side, ranking the interests involved and using thisranking to favor the most important as is discussed in Chapter 6. Stakeholders shouldbe made aware of the ranking and decision process where possible. In the end, toughtrade-off decisions may be involved, but stakeholders should have confidence in theprocess.11.Why arephilosophical approaches to ethicaldecision making relevant to modern corporations andprofessional accountants?The philosophical approaches to ethical decision making (utilitarianism, deontology, andvirtue ethics) are relevant because of the greater and growing ethical awareness,sensitivity and power of stakeholders that can make a difference to the reputations andfortunes of companies and of professional accountants. Their support is needed nowmore than ever.12.What are the common elements of the three approaches to ethical decision making which arebriefly outlined in the chapter?The common elements are measures of well-offness, fairness, right(ness), and virtuesexpected.13.Is a professional accountant a businessperson pursuing a profit or a fiduciary that is to act in thepublic interest?Both, but when there is a conflict between these roles, the professional accountantmust place fiduciary duty above personal profit. Otherwise the public interest will notbe protected (which is the primary goal of a professional–see later chapters fordiscussion).14.Why is it important for a professional accountant to understand the ethical trends discussed inthis chapter?So that the expectations for business can be understood and advice given or actionsscreened with regard to what might be acceptable and desirable, now and in the futurewith regard to operations as well as financial matters. Also, the accounting profession issubject to the same set of expectations, and is expected to rise to higher standards ofperformance than business.15.Why should a professional accountant be aware of the Ethics Code of the InternationalFederation of Accountants (IFAC)?

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Because the IFAC Code is the newly defined standard to which all IFAC membersincluding the AICPA, CICA and ICAEW, IMA and SMAC have pledged to harmonize theirCodes to during the next 5 years. The IFAC Code contains the common elements towhich all professional accountants will adhere.16.Why is an ethical corporate culture important?An ethical corporate culture is considered to be one of the most important aspects bywhich behavioral guidance in the form of corporate policies and compliance therewithcan be passed on to employees and agents. Developing and maintaining an ethicalcorporate culture is now an expected facet of good governance, and therefore part ofwhat directors and senior executives must ensure as part of their responsibilities andduties.

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Case Solutions1.Pedophile Priests in the Catholic ChurchWhat this case has to offerThis case provides an understanding of recent instances of continued unchecked sexual abuse. This oneaffected a major religion with international scope, and resulted in an outraged church and public.Teaching SuggestionsIt might be wise to begin by asking whether anyone has been affected by this scandal,either personally,or through a friend or family member, or as a member of the Catholic Church. The discussion will beaffected by the answers, and asking the question this way gives cover to those students who may havebeen personally affected, but do not wish to discuss it. In that event, they can contribute as members ofthe church. The Instructor’s discretion and sensitivityshouldhelp guide the discussion.Discussion of ethical issues1. What are the responsibilities of employees who become aware of unethical behavior by theirsuperiors?Employees who become aware of unethical behavior by their superiors should report it to the nexthigher superior, or to an ethics officer or other responsible officer. Employees are often reluctant to doso, however, because they are worried about personal repercussions to them, or they do not want toget involved, or because they do not want a reputation as a “snitch.”2. What actions should be taken by corporate leaders when they receive reports of sexual abuse? Why?Corporate leaders should act on receiving such information, first, temporarily removing the allegedabuser from the alleged victims, second, to investigateand verify it, then depending on the outcome, totake appropriate action. Doing nothing is the worst course of action, and endangers the group further.3. If unethical or illegal behavior occurs within a business enterprise, how can employees bring aboutchange when initial reports are ignored?The employee may have several options available: the employee can report to a superior higher up inthe management of the firm; the employee can hire an attorney to advise how to proceed and toprotect the employee from repercussions to the extent possible; the employee could report thebehavior to a news organization. Whether any of these options is a good idea will depend upon thesituation.4. Why do you think that senior managers want to cover-up scandals that occur within theirorganizations?No manager wants to be held accountable for scandals that occurred while the manager was in charge.5. What actions can senior managers take to repair the damaged reputations of their organizations afterscandals become publicly known? Do you think that apologies are worthwhile?A great deal depends on whether the organization reported the scandal, or whether it was reported byothers. If the organization, itself, reported the scandal, it has taken major steps towards repairing itsreputation. It can show thatit does not condone the bad conduct, that as soon as it learned of it, it tooksteps to stop it, that it reported the conduct to the public, and that it took all necessary steps to prevent

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such a thing from happening again. Yes, apologies are worthwhile, especially when the organization haspublicly reported the scandal.If the organization did not report the scandal, but someone else did, it will have a much harder timerepairing its reputation, showing that it took steps to correct the conduct, and redeveloping trust on thepart of the public. Unless made by someone unconnected to the scandal who had no knowledge of it,apologies in this instance are not likely to be well received, as the organization’s credibility will havebeen lost. It will be a long time, if ever, before the organization regains the trust it once held.2.Sexual Abuse by a Penn State Football CoachWhat this case has to offerThis case provides the ironic example of nondisclosure by those who wished to protect the reputation ofthe university, the irony being that its reputation was damaged far worse than it would have been hadSandusky been fired when his conduct first became known, and the matter disclosed to the public. Itwould have provided credibility from which the university could have more readily recovered.Teaching SuggestionsAs with the pedophile priests case, it would be wise to begin by finding out if anyone is a Penn Stategrad, was involved or knew someone that was involved.Discussion of ethical issues1. Football is big business, raising millions and millions of dollars for American universities. Numerousadministrators and officials at Pennsylvania State University put a higher value on college football thanon the welfare of children. How would an organization develop such a misguided culture?It is likely that donations to the football program and the universitytook precedence over everythingelse. In addition, administrators were almost certainly reluctant to do anything that would or coulddamage the university’s reputation, as that would directly impact donations.2. Louis Freeh discovered that a janitor saw Jerry Sandusky abusing a boy in the showers in 2000, butsaid nothing because he was afraid to “take on the football program.” Why do you think that certainorganizational departments and programs develop a mystique such that their activities and behaviorscannot be challenged nor questioned? What can organizations do to prevent this from happening?Because the football program was the biggest money-maker for the university, it became untouchable.The way to change that kind of thinking was to institute a culture of integrity which would have madesuch conduct unthinkable, donations or not.3.LIBOR ManipulationsWhat this case has to offerThis case reviews the huge impacts on those banks and their executives whose employees were foundto have manipulated the information on which the LIBOR benchmark rate was based.It is an example ofa systemic, industry-wide breach of ethics.Teaching Suggestions

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Discussion of ethical issues1. Which groups were most at fault for the LIBOR manipulations: brokers, traders, bank executives, bankboards of directors, or regulators? Why?Each group bears responsibility for the LIBOR manipulations.Brokers and traders manipulated the ratesfor their own personal benefit, bank executives either knew and permitted it, or should have hadoversight measures in place to learn of it. When the 2008 financial crisis came, they requestedmanipulation of the LIBOR numbers to make the banks look more financially healthy than they were.Boards of directors have a fiduciary duty to the entities, but failed toexercise it. Regulators should havebeen aware of what was happening, or were aware, and were slow to act.2. What should the regulatory bodies do with the finds paid by these banks? Reduce tax rates for thegeneral public? Use the funds to re-educate investment bankers?This question should produce a lively discussion among students.3. Robert Diamond continues to receive his£2million pension annually.Should he sufferfinancially byhaving to forfeit this pension because the LIBOR scandal occurred while he was CEO of Barclays?This question, too, will produce a lively discussion. To attribute blame (and punishment) to Diamond,some would require a showing that he knew and permitted the conduct, or that his leadership was solax that it occurred because of his failure. During this discussion, it will be helpful to keep in mind thatthis was a systemic, industry-wide failure. Diamond was very much like the other CEOs.4. Both Barclays and UBS reduced the bonuses of current employees to help pay part of the fines thatoccurred because of the actions of former employees. Is this fair?Another question for lively discussion. These provoke thinking about how we assign blame, and how wehold (or don’t hold) people accountable.5. The rate manipulations seemed to be systemic to the industry because so many banks were involved.What can be done to curtail such widespread unethical practices within an industry?Government regulation must address these shortcomings, and provide adequate oversight to make surethey are compliant. But in a financial environment where the industry is more powerful than thegovernment, this may be problematic.6. Why weren’t the directors of the banks that had caused the scandal fined or jailed? Should they havebeen?This question again confronts the issue of how we assign blame, or don’t, and who we hold accountablefor such failures.7. Why should members of the public trust the banks that were involved in manipulating the LIBOR rate?If the “Occupy Wall Street” protestsare indicative, the public does not trust the banks involved, or anybanks. After the collapse of financial markets in 2008, public distrust of banks and financial institutionswere at anall-timehigh.

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4.Pepsi iPhone App Stereotypes WomenWhat this case has to offerThis case is an example of divergent beliefs among various stakeholders. Pepsilaunched an iPhoneapplicationas part of an advertising campaigntargeting young males whichreceived a wave of criticismssince it was perceived as degrading and objectifying women. There are several interesting aspects of thiscase,such as the reasons why this app was launched in first place and the company’sresponse to socialcriticisms.Teaching suggestionsA good way to start the class discussion is to ask what a company should do before launching a publicmedia campaign. Following, I ask the students their opinionsabout theAMPiPhone application andwhether it should be considered harmless and funny or a serious public relations issue. Finally, I ask thestudents what a company should do if a media campaign becomes the center of criticisms and what dothey think about Pepsi’s response.Discussion of ethical issues1. Doyou find it interesting that most of the critics were women and the media, but those whoconsidered the app to be funny were young men?Fromamarketing perspective, this iPhone applicationwasappealing to some target consumers. Clearly,what could be considered acceptable to some target consumers is not necessarily acceptable for allpeople. Male-centered marketing is a feature of AMP, promoting itself through male dominatedextreme sports (www.ampenergy.com). The iPhone application may have appeared as a harmless wayfor guys trying to pick up women; however, its features stereotyped women andareoffensive. This is anexample of moral sensitivity as discussed in Chapter One.2.The target market of AMPEnergy is males between the ages of 18 and 24. If this group of consumersfound the iPhone app to be funny and acceptable, then why did Pepsi withdraw the app?Pepsi’s intention was probably to attract some attention but this campaign ended up becoming a socialmedia fiasco. An interesting aspect of this case is how divergent opinions spread very rapidly throughblogs, twitter and other social media beyond the company’s control. Ultimately, the companyresponded to the interests of a large set of stakeholders. The potential costs of keeping this campaign interms ofdamagedreputation and loss of business outweighed thefinancialbenefits of thecampaign.3. Are advertising campaigns that are in bad taste also unethical?A number of factors might affect people’s reaction to an advertising campaign, for example howrelevant the advertising is to the product and its target market, the campaign’s style and presentation,and where the advertisementsappear. Although disrespectful references togender, race, religion,orculture should never be allowed, it is sometimes difficult to draw a line between bad taste and unethical

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advertisement. Companies may use surveys or focus groups before launching a mass media campaign tomake sure it is considered acceptable for a wide audience.

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5.Should Porn Be Sold by Cell Phone Companies?What this case has to offerThis case permits students to discuss the trade-offs betweenactivities that increase profits and activitiesthat are socially responsible. It allows them to see that sometimes firms will forego profitable venturesif the ethics of the venture are questionable.Teaching suggestionsThis is a good case for discussing ethical relativism. Many students find ethical relativism appealingbecause it does not force them to say that anything is wrong. The theory is often used by students toeschew taking responsibility. So, a general discussion of ethical relativism should be conducted prior todiscussing the facts of this case.Discussion of Ethical Issues1. Adult content is profitableThe argument infavorof permitting adult content on cell phones is ‘freedom of expression.’ Somestudents will try to use an ethical relativism approach. That is, they will argue that whatever is in theindividual’s interest is ethically acceptable. That is, that ethics is simply a matter of personal choice.This is a good opportunity to point the flaws in ethical relativism.•This position would allow any practice to be ethically correct (such as slavery, torture, orgenocide) if a number of people within that society thought that the practice was acceptable.•It does not admit that there is an absolute standard of right and wrong. There are manysimilarities in the ethical and moral codes of societies over time and through different cultures.Prohibitions about murder and other forms of violence are universal standards that would beabandoned under an ethical relativist approach.•Relativism admits of too many exceptions. “The ethical standard may apply to you, but not tome, because it would be inconvenient to me.”•It is very difficult to define a culture or a social group such that clear standards can beestablished for that group or sect.The implication of ethical relativism is that values become a function of or are causally dependent uponan individual’s culture. The implication is that ethical truth would be ‘relative’ to a specific culture and aspecific time. Such a position essentially denies that there is any ethical truth. (SeeTheEncyclopaediaof Philosophy, 1967, Paul Edwards (ed.), v. 3, pp. 75-78).Many people forget that having a right also entails having a responsibility. Adults may have a right toview and read anything that they want. But they also have responsibilities.•Pornography can be harmful to children and so we have a responsibility to not allow them tosee such material until they are old enough to understand what the material represents.•Pornography tends to exploit women and the vulnerable. As such we have a responsibility tonot encourage their exploitation.

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•We have a responsibility to be sensitive to the values of others who may be offended by seeingpornography on their cell phones.2. The trade-off between profitableandsocially responsibleactivitiesSome will argue for a false dichotomy, that a firm can either be socially responsible or it can beprofitable but it cannot be both. However, there is no strong empirical evidence to show that firms thatare socially responsible are any less profitable than those firms that are not socially responsible. In factthere are strong reasons for firms to engage in socially responsible activities, many of which have anindirect economic impact.•Investments in socially responsible activities can increase the firm’s reputation, thereby creatingan intangible asset for the firm.•Many young adults who are beginning their careers prefer to work for firms that are sociallyresponsible.•Community stakeholders can be adversely impacted and lobby regulators to deny licensingpermits.Ultimately, Telus, the mobile phone provider in the case, decided that the valuessignalledby the porncontent service were incompatible with their desire to be “Canada’s premier corporate citizen” andwithdrew the service.Useful Videos, Films & LinksMclean, Catherine (2007) “Why Telus ditched its plans to profit from porn” Globe and Mail, February 22.http://www.theglobeandmail.com/report-on-business/article744437.eceFournier, Chris (2007) “Telus Stops Selling Porn After Protests From Catholic Church” Bloomberg,February 21.http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aqeEJ53nbyp0&refer=canadaAusten, Ian (2007) “Canadian Company Offers Nude Photos via Cellphone” New York Times, February 19http://www.nytimes.com/2007/02/19/business/worldbusiness/19cell.html?_r=1&ref=telus-corporationCarew, Sinead (2008) “Porn to spice up cell phones” Reuters, January30thhttp://www.reuters.com/article/idUSN3030000720080130

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6.Virgin Mobile’s Strip2Clothe Campaign: Exploitive, Risqué, and WorthwhileWhat this case has to offerThis case allows students to discuss the issue of freedom of expression, freedom of choice as well aspornography. More importantly, it provides an opportunity to illustrate that having a right also entailshaving an obligation.Teaching suggestionsThe class should begin with a general discuss of the pervasiveness of pornography. It is readily availableto almost everyone at any time. Does the fact that it is readily available make it socially acceptable?The students should also discuss the exploitive and dehumanizing aspects of pornography (See thediscussion of the Ethics CaseShould Porn be Sold by Cell Phone Companies?above).Discussion of ethical issues1.The Strip2Clothe campaign may have been in questionable taste, but it did raise tens of thousandsof pieces of clothing for the homeless. Does the end justify the means?The theory that the end justifies the means is a political theory, often attributed to Nicole Machiavelli.However, it is not an ethical theory. Ethics involves treating people as ends in themselves, and nottreating them simply as a means to an end. Providing clothes to homeless people is a very worthwhileend. However, the end is accomplished by exploiting people. Having vulnerable teenagers perform astriptease for the titillation of others is a form of exploitation. Exploitation (dehumanizing people) is nottreating people with the respect and dignity they deserve by virtue of their humanity. As such, the end(clothing) does not justify the means (exploitation).2.Virgin Mobile has a history of using cutting edge advertisements. It poked fun at religion in its 2004holiday commercial Christmas-hanukwanzakah”, and it had the company’s founder, Sir RichardBranson, stand in a nude suit in New York’s Times Square as part of a “Nothing to Hide” campaign.Are marketing tactics that are tasteless and risqué also unethical?One of the purposes of marketing is to make a company or product known to potential consumers.Marketing that is in poor taste offends some stakeholder’s preferences or values. Tasteless advertisingis justified on the basis that the consumer does not remember the advertisement, but does rememberthe product name. Tasteless advertisements are simply a means of communicating brand nameinformation. But something that is in poor taste is not necessarily unethical. It becomes unethical whenthe advertisement uses people as a means to an end, or when the advertisement is designedto exploitvulnerable consumers.3.Social awareness advertisements-Some years before, the Benetton Group S.p.A. developed theUnited Colors of Benetton Campaign, originally to draw attention to prejudice against black people.

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The campaign broadened over time to include other prejudices and consist of a series of shockingpictures published in unexpected venues. For example, there were pictures of a nun kissing a priest, abombed car in a street, a white dog kissing a black lamb, an AIDS activist on his death bed in front ofa picture of a crucified Christ, and a white girl portrayed with an angelic halo and a black boy withhair like horns. Is the Virgin campaign substantively different that the Benetton campaign of 1992?Some advertisements not only market products but they also remind all of us of our ethnic diversity.The United Colors of Benetton drew attention to ethnic and cultural differences. There were notexploitive; they were not marketing to the vulnerable; and they were not ethically questionable. TheVirgin Mobile advertising campaign, on the other hand, was exploitive of teenagers. They wereencouraging teenagers to conduct a striptease for the voyeuristic gratification of others. A stripteasetends to dehumanize the participant and injures the dignity of the stripper. Virgin was also marketing tothe vulnerable. The young are cognitively vulnerable because they have not yet reached their morallymaturity. Exploitive advertisements that are marketed to the cognitively vulnerable are considered justas unethical as advertisements that are marketed to the physically vulnerable (medical remedies tothose with allergies) or to the mentally vulnerable (children, or those grieving or serious ill).4.What rule would you put forward that would differentiate ethical from unethical advertisingcampaigns?The two rules that most advertisers follow are:1.do not market to the vulnerable, and2.do not use people in an exploitive manner.Useful Videos, Films & LinksLavallee, Andrew (2008) “Virgin Mobile Pulls Back Racy Campaign” The Wall Street Journal, July21http://online.wsj.com/article/SB121660673649869421.html?mod=djemPJ

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4.Goldman Sachs and the Greek VeilWhat this case has to offerThis case constitutes an example of a company aiding a client to enter into a business transaction thatappears legal, but is not necessarily ethical. Goldman Sachs helped the Greek government to set upstructured finance transactions that reduced the book value of Greece’s national debt and resulted in animmediate cash windfall from the securitization of future cash inflows from airport landing fees andlottery revenue. These transactions enabled the Greek government to mask the true extent of its deficitand to legally comply with European Union rules for its member countries.Teaching suggestionsAn interesting way to introduce this case is to talk about the size and potential consequences ofGreece’s bail-out. In May 2010, the European Union members and the IMF agreed on a 110bn-euro($146.2bn) three-year bail-out package to rescue Greece's embattled economy. Next, I ask studentswhat the potential causes of Greece’s crisis were and whether or not it was an avoidable problem.Ultimately, this case highlights how a combination of inefficient oversight, ambiguous accounting rules,and complex financial transactions allowed the Greek government to borrow and spendbeyond itsmeans.Discussion of ethical issues1. Did Goldman Sachs do anything wrong legally or ethically? Explain your answer.Structured finance transactions are part of normal government treasury operations. Europeangovernments obtain funds from investors around the world by issuing bonds in yen, dollar or Swissfrancs; however, each government needs euros to pay salaries and other expenses. Years later thebonds are repaid in the original foreign denominations. Investment banks help their government clientsto hedge currency-related and other financial risks,Goldman Sachs acted in behalf of the Greek government in a series of legitimate financial transactions.Goldman Sachs was only one of several investment banks that worked with the Greek government.Moreover, in theirowndefense, the firm claimed that these transactions had a "minimal effect on thecountry's overall fiscal situation."However, the intention of these transactions could have been to deceive the European Union rules. Itseems somehow unethical to profit by aiding a client to circumvent rules that are in place to ensure themonetary stability of the European Union countries.Finally, Goldman Sachs did not only profit from these transactions, but also from helping the Greekgovernment to restructure its debtin 2010,as well asfrom proprietary trades that essentially betagainst the country's ability to manage its problems. This may also constitute an ethical dilemma giventhat the investment bank indirectly contributed to the Greek crisis and later on profited from this

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country’s financial debacle. It would be hard to argue that these transactions were acceptable or ethicalpractice because of their highly negative social consequences.It would appear that Goldman Sachs bestguess was that their services to Greece would prove unsuccessful in changing the fundamental financialsituation in Greece. Perhaps investment advisers/banks etc. should be required to disclose when theyare betting against a product/client.2. Would it make a difference if other investment bankers were also providing such services?Arguably, ifGoldman Sachs had not aided Greece’s government to set up these transactions, some otherBank would have done it. Most large investment banks offer these services to public and private clients.A recent article by the New York Times highlights that “Instruments developed by Goldman Sachs,JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing inGreece, Italy and possibly elsewhere.”1It is very poor ethical reasoning to argue that “someone else will do it if we don’t”, or that “everyone isdoing it” because either approach can justify virtuallyanyaction. These rationales do not refer to anyfundamental ethical principles. Ultimately, a corporation that is interested in its ethical reputationshould base its actions on ethical principles, not on what their competitors are doing.3. What subsequent impacts could the transactions described above have on Goldman Sachs?Becausethese deals werenot recorded asgovernmentloans,theymay have misled investors andregulatorsabout the depth of the Greece’s liabilities.The credit swap enabled Greece toimprove itsbudgetand meet a target needed to remain within the region’s single currency. Knowledge of Greece’strue financial position may have changed investors’ perception of the risk associated with this country,and the price they may have been willing to pay for the country’s securities. Investment banks have afiduciary duty while issuing public securities, if Goldman Sachs was aware of Greece’s potential financialrisks and failed to disclose them while issuing securities, the investment bank may be subject to legalactions.At the very least, clients should begin to question Goldman Sachs’ loyalty and whether the firmcan be trusted.In addition, there can be additional reputational and legal costs for the investment bank. The U.S.Federal Reserve and Securities and Exchange Commission are currently examining financial deals thatGoldman Sachs and other banking companies made with Greece before the country's debt crisis,creating potentially more public relations troubles for Wall Street firms, already troubled by their role inthe U.S. financial crisis of 2008.Useful Videos, Films & Links1“Wall St. Helped to Mask DebtFueling Europe’s Crisis”Louise Story,Landon Thomas Jr.AndNelson D.Schwartz,Published: February 13, 2010,http://www.nytimes.com/2010/02/14/business/global/14debt.html?pagewanted=1&_r=1

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