Lehman Brothers Case Study

625 Words3 Pages
1) Describe the situation at Lehman Brothers from an ethic perspective. What’s your opinion of what happened here?
Lehman Brothers had a culture problem, as they incentivized there employees to take excessive risks. Their culture fostered significant risk taking. They use to reward employees with lots of money for taking risks. Individuals who made questionable deals were treated as heroes; on the other hand anyone who questioned decisions was often ignored or overruled. They use to ignore risk just hoping for outlandish profits, meaning it felt more like a casino then an investment bank. They ignored basic regulatory rules which created financial danger. Basic rules are the way companies grow and expand. Their desire to make money at all
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Executives like Richard Fuld instead of owning up to their mistakes they made it worse by pushing envelope and justifying questionable accounting practices. They were not being responsible they never admitted to the end.

4) Could anything have been done differently at Lehman Brothers to prevent what happened? Explain.
Yes, if they would have established stricter eternal procedures none of this would have happened. Meaning by having strict clear rules would have prevented them from taking the above risks. They would have stayed away from questionable tax deals. If they had a more transparency, and better in-house check and balance systems they would have removed themselves from making bad decisions. If they were not driven by the principle of money at all cost they would have been protected. If they would have been more risk averse they would have avoided filling for bankruptcy.

5) After all the public uproar over Enron and the passage of the Sarbanes Oxley Act to protect shareholders, why do you think we still continue to see these types of situations? Is it unreasonable to expect that business can and should act ethically?
The reason is simple greed blurs the vision. When a company sees a potential win fall they have a tendency to look the other way and ignore the warning signal. When there is a will to be honest people will find the way to be ethical and moral. Lehman Brothers
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