Reports Focus on Ethics in Business and Finance

Jul 7th, 2008 • Posted in: News

Accounting rules, credit ratings, and low-price high fashion figure in headlines

NEW YORK and LONDON
The way profits are tallied and the methods in which prices are slashed were viewed through the ethics lens last week in several press reports. They include:

• U.S. officials say they will propose changes in accounting regulations in order to make U.S. businesses a more attractive investment overseas, but critics say the move could water down ethics regulations passed in the wake of the Enron collapse, according to a report from the New York Times. The Securities and Exchange Commission is preparing a timetable that will allow U.S. companies to shift to international accounting rules, a move that may allow for computation of higher rates of earnings, according to the Times. Critics warn that some provisions of international rules are weaker than U.S. regulations, allowing, for instance, sketchier disclosure about mortgage-backed securities, derivatives, and other complex investment vehicles at the vortex of the current housing crisis.
• Credit-rating agency Moody’s announced last week that some employees had violates its code of ethics by ignoring a “modeling error” that allowed several low-performing investments to receive much higher ratings than they deserved, according to a report from Fortune. The company did not identify the investments or the people responsible for the error, Forbes reports, noting that the disclosure comes at a bad time for credit-rating firms, which have suffered damage to their reputations in the aftermath of the subprime meltdown.
• British discount clothing firm Primark is facing a PR problem after a recent documentary alleged that the firm used child labor in India. According to reports from the Edinburgh Evening News and the London Independent, the fashion industry is seeing a backlash. “There has definitely been a shift and I think the media awareness surrounding the way these clothes are made has helped a great deal,” high-powered clothing buyer Sarah Murray told the Evening News. “A couple of years back it was almost cool to reveal just how little your outfit really cost when someone commented on how great you looked, but actually it’s not cool — especially when you realize that a child working in horrific conditions made it.”

Sources: New York Times, July 5 — Forbes, July 5 — Independent, July 4 — Edinburgh Evening News, July 4.

For more information, see: Related Newsline Commentary, Feb. 18 — Related Newsline story, Feb. 11 — Related Newsline story, Jan. 7 — Related Newsline story, Oct. 22, 2007.

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One Response »

1. Ethics Newsline® » News » Ethical Investment Dilemmas Probed by World Press on July 14th, 2008 at 7:53 pm:

   [...] more information, see: Related Newsline Commentary, July 14 — Related Newsline story, July 7 — Related Newsline Commentary, June 23 — Related Newsline story, June 9 [...]

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