High Ethics Culture

The Compliance Officer Who Strayed

Marisa Baridis, 29, was the legal compliance officer at Morgan Stanley, Dean Witter, Discover and Company. Ms Baridis was in charge of what is commonly referred to as the “Chinese Wall” in brokerage houses. Her job was to be certain that sensitive information did not cross from the side of house putting together deals to the side of the house that buys stock. Her responsibilities included making certain that confidential information about Morgan Stanley clients did not leak to the brokerage side of the business so that Morgan Stanley brokers would not use this information
for trading.
Ms Baridis met Jeffrey Streich, 31, in the summer of 1997. Mr Streich was a broker who specialized in speculative stocks. Over a six-month period, Ms Baridis allegedly provided Mr Streich with information in exchanged for $2,500 for each tip. However, late in October 1997, Mr Streich and Ms Baridis would have their last meeting when Mr Streich went to their meeting wearing a hidden recorder, and there was a camera across the street that videptaped them both sitting in the window of a restaurant. The tape shows Mr Streich handing Ms Baridis $2,500 in one-hundred-dollar bills.
Ms Baridis, who was indicted on charges of trading on inside information to make a profit, was fired from her $70,000-a-year job. Her father posted her $250,000 bail. Ms Baridis also received kickbacks totaling $40,000. Ms Baridis entered a guilty plea in exchange for a lighter sentence contingent upon her cooperation. Mr Mitchell Sher, 32, admitted that he made cash payments to Ms Baridis in exchange for her furnishing confidential information about pending events such as mergers for Morgan Stanley clients.
Mr Sher admitted that he used information provided to him by Ms Baridis to trade in shares of Georgia-Pacific Corp., Burlington Resources, and two other companies. Unlike the ten other individuals charged in the case, Mr Sher was not a broker but rather a vice president for a book distributor. He also admitted in his plea that Ms Baridis had fed him confidential information in exchange for cash when she worked for Smith Barney earlier in her career.
When asked to comment on the Baridis case, an executive with Smith Barney said, “We had trusted the individual with great responsibility and that trust was misplaced.”
(Source: Adapted and modified from Jennings, Marianne M., 2006, Business Ethics: Case Studies and Selected Readings, Fifth Edition, Thomson West, pp. 131-132: Case 4.5)
Your task:
Based on the above case story, discuss the concept of the three elements of ethics, ethical issues and ethical dilemmas. Critically evaluate and justify how does the institutionalization of business ethics can help to minimize ethical issues?
Provide evidence on habits of strong ethical leaders being able to build high ethics culture in corporations. You are required to support your discussions with relevant and appropriate literatures.

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