MODEL MEL SYLLABUS 2008
(6 Sessions/ 80 minutes each)
LEONARD N. STERN SCHOOL OF BUSINESS
NEW YORK UNIVERSITY
PROFESSIONAL RESPONSIBILITY:
MARKETS, ETHICS & LAW B02.3101.60
Summer Term 2008
 Dates: May 22- June 26
 Meeting Time: 6:00-9:00pm Thursday
 Classroom: KMC 3-60
PROFESSOR Brenner
 Office: KMC Suite 10-179
 Office Hours: By appointment
 Email: kbrenner@stern.nyu.edu

Secretary: icoleman@stern.nyu.edu or 998-0048
COURSE OBJECTIVES
The purpose of this course is to introduce the student to a broad range of “non-market”
issues encountered by managers and business professionals, and to help the student
develop a set of analytical perspectives for making judgments when such issues arise. In
economics many of these issues can be described as market failures or imperfections. To
a limited extent, we will illustrate how the legal system is used to redress such failures of
the market economy. We will also examine the role of ethical norms and reasoning in
resolving such issues in managerial life, and in establishing standards of professional
responsibility.
More directly, the student in this course will exercise professional judgment through
discussion and analysis. Most such exercises will require the analysis of one or more
cases, as indicated on the attached schedule of class assignments. In addition, we will
study writings in the fields of ethical reasoning, professional responsibility, and the law.
PROFESSIONAL RESPONSIBILITY COURSE PACK
Required Cases & Readings 2008
All required cases and readings for this course are located in TWO SEPARATE places:
Your Professor’s Blackboard Page (free) AND a Xanedu Course Pack (purchase).
.
1. BLACKBOARD
On your professor’s Blackboard page you will find the Professional Responsibility
Cases and Readings 2007-2008 posted under the Course Documents link together with
a Table of Contents.
2. XANEDU.COM
On Xanedu.com you will find additional required readings for Professional
Responsibility. To access these readings you will need to purchase a Xanedu access
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code from the NYU Professional Bookstore.
Online ordering instructions for the Xanedu material:
Go to the NYU Book Store web site: http://www.bookstores.nyu.edu
Click on the "Search for a Book" link
Select the "Search by ISBN" option and enter ISBN 978300047318B
Proceed to Checkout and complete your order.
Within one business day of completing your order you will receive an email with your
Key Code that will give you access to your digital course pack.
Tax and shipping charges will be removed before your credit card is charged.
How to access your Xanedu Course Pack
1. Open a Web browser and go to www.xanedu.com.
2. ALREADY A REGISTERED XANEDU USER?
Log in to go to your My Xanedu page. At the bottom of your My Xanedu page is a
field labeled ‘Do you have a key for a Course Pack or ReSearch Engine?’ Enter the
16-digit key shown below, including the hyphens, into this field and click ‘Go’.
3. NOT A REGISTERED XANEDU USER?
You’ll need to register and create a user name and password. Click the Register link
under the “Students” login area on www.xanedu.com. Click the button labeled
‘Student Registration’. Complete the online registration form. Enter the 16-digit key
shown below, including the hyphens, at the bottom of the form. Submit the form.
Your My Xanedu page is displayed.
4. Select your Course Pack from the My Course Packs list and click ‘Go’.
Important things to know about the key and your digital Course Pack
 You can enter the numeric key shown above only one time. If you have a problem or
question, call Xanedu Customer Service at 800-218-5971, Option 3, or send email to
contact@xanedu.com.

Access to your digital Course Pack cannot be resold. Once you enter the numeric key,
only you can access the Course Pack.

You will have unlimited access to your digital Course Pack until whichever comes
first:
six months after the date of purchase,
Or two months after the last day of your course (as specified by your instructor).

To access your Course Pack at anytime:
1. Open a Web browser and go to www.xanedu.com.
2. Log in with your user name/password combination.
3. Select the Course Pack from the My Course Packs list on your My Xanedu page.
4. Click ‘Go’.
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Problems?
Contact rkowal@stern.nyu.edu
PREPARATION FOR CLASS
Each class session consists of several study modules. Each study module contains
readings and study questions. Your primary obligation in this course is to prepare for
class discussion by thorough reading and analysis of assigned materials. Case discussions
and in-class activities are an essential part of the course. All students are responsible for
mentally preparing answers to all of the study questions before coming to class. The
instructor will ask some students to provide their answers orally, as a basis for further
discussion.
GRADING
The weights for the student’s overall grade are:
Class Participation
Homework: Written Study Analysis
Class Presentation
25%
35%
40%
HOMEWORK: WRITTEN STUDY ANALYSIS
DUE: On or before the day the topic is covered in class
Each student should perform a written analysis for 3 study questions over the course of
the term. That is, for 3 sessions of his or her choosing, the student should write out his or
her analysis of any one of the assigned study questions. These analyses should each be 2
to 3 pages in length (typed and double-spaced). The submissions must be turned in
before the topic is covered in class.
CLASS PRESENTATION
On the first day of class each student will be assigned to a team and a case for
presentation later in the semester. The teams will be asked to prepare a 15-20 minute
presentation of the case. The presentation must include a discussion of market conditions,
legal implications and ethical considerations relevant to the case. Those concepts are to
be integrated into a position on the professional responsibility issues involved.
After the presentation, the team is expected to lead the class in a 10-15 minute discussion.
The team is expected to submit a “hard-copy” of the presentation at the conclusion of the
discussion.
The cases for presentation are relatively well known and therefore information is readily
available. Options surrounding the presentation format will be discussed in greater detail
the first day of class.
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COURSE SCHEDULE
TOPICS & ASSIGNMENTS
SESSION #1
DATE: MAY 22
MARKET FAILURES & PROFESSIONAL DILEMMAS
READINGS
Economic Theories of
Regulation: Normative vs.
Positive”
The Price of Lobster
Thermidor
Pollution Case Highlights
Trend to Let Employees
Take the Rap.”
Making An Ethical
Decision
Linda N. Edwards &
Franklin R. Edwards
Course Pack
Course Concepts
The Economist
http:/www.suboceansafety.
org
Dean Starkman
Moral Standards Across
Borders
Terry Halbert & Elaine
Ingulli
Course Concepts
Control By Law
STUDY QUESTIONS
1. Why do market failures tend to bring about laws or regulations to counter their effects?
2. Based on the Edwards article which market failures or imperfections are present in the
“Lobster Thermidor” (The Economist) case? In the “Pollution” (Starkman) case?
3. How might ethical methodology help an executive or legislator to make more effective
decisions in the presence of market imperfections?
4. Based on the Halbert & Ingulli reading identify at least one market failure related to
your employment situation and apply the methods of ethical reasoning to this market
failure.
TRUTH & DISCLOSURE
READINGS
Bluffing
Ethics and the New Game
Theory
Bitter Pill
Jim T. Priest
Gary Miller
Double Agents in the
Roy C. Smith
Ralph T. King, Jr
Course Pack
Course Concepts
Course Concepts
Truth & Disclosure
(“Truth”)
“Truth”
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Financial System
The Numbers Game
Arthur Levitt
“Truth”
Ghost Story
Anna Wilde Mathews
“Truth”
STUDY QUESTIONS
1. Would a “Bluffer” (Priest) voice any objections to the corporate actions of Boots
described in “Bitter Pill” case? Do you agree with Carr? Can you identify any market
failures in “Bitter Pill”?
2. Is there anything ethically wrong about the actions of the medical ghostwriters as
described in “Ghost Story”? What would happen if all or most drug companies behaved
in similar ways? Do their actions fall within the scope of business bluffing according to
Priest?
SESSION #2
DATE: MAY 29
GIFTS, SIDE DEALS & CONFLICTS OF INTEREST
READINGS
Neutral Omni-Partial Rule
Making
Bribery & The Foreign
Corrupt Practices Act
Buynow Stores
Roger Berg
Wall Street and the
Nursery School
Drug Maker’s Efforts to
Compete in Lucrative
Insulin Market are Under
Scrutiny
Ronald M. Green
http://www.usdoj.gov/crimina
l/fraud/docs/dojdocb.html
Bruce Buchanan
Ronald M. Green
Gretchen Morgenson & Pat
McGeehan
Gardner Harris & Robert Pear
Course Pack
Course Concepts
Gifts, Side Deals &
Conflicts of Interest
(“Gifts”)
Gifts
Gifts
Gifts
Gifts
STUDY QUESTIONS
1. Make a list of all the gift practices described in Buynow Stores. In your judgment,
which of these, if any, are inappropriate? Use ethical concepts and methods from the
Green and Halbert/Ingulli readings to support your position.
2. Do the Roger Berg and Wall Street Nursery School cases differ materially from
Buynow Stores? Use ethical concepts and methods from the Green and Halbert/Ingulli
readings to support your position.
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3. Has Novo Nordisk and their “anchor in office program” created any market failures or
engaged in any conflicts of interest in their current insulin drug marketing practices
(“Drug Makers Efforts to Compete in Lucrative Insulin Market Are Under Scrutiny”)?
Are the Novo sales representatives engaging in bribery? Should drug companies refrain
from such activities and risk losing business?
SALES AND MARKETING
READINGS
Investment
Management: Business...
Or Profession…
Commissions on Sales at
Brock Mason
Disorders Made to Order
Drug Makers Scrutinized
Over Grants
John C. Bogle
Course Pack
Sales & Marketing
Tom L. Beauchamp
Sales & Marketing
Brendan I. Koerner
Gardner Harris
Sales & Marketing
Sales & Marketing
STUDY QUESTIONS
1. In the “Brock Mason” case, Mr. Tithe, the branch manager, describes the situation with
the widow as “unfortunate” but not “unfair.” Do you agree? Use ethical methods and
concepts to justify your position.
2. In what ways, if any, could we determine that pharmaceutical companies (“Disorders
Made to Order”) are ethically responsible for promoting new mental illnesses in order to
boost their profits from drug sales (“Drug Makers Scrutinized over Grants”)?
3. In his article, “Investment Management: Business . . . or Profession,” John Bogle
implies that much of the mutual fund business is driven by moral hazards and fiduciary
duty problems. Do you agree?
PRODUCT LIABILITY
READINGS
Risk Allocation: Products
Liability
A.H. Robins: Dalkon
Shield
The Class-Action
Quandary: Cash Payment,
No Apology
In Breast Implants Scandal,
Where Was Dow
Corning’s Concern for
Course Pack
Terry Halbert & Elaine Ingulli Product Liability
A. R. Gina & Terry Sullivan
Product Liability
Meryl Gordon
Product Liability
Andrew W. Singer
Product Liability
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Women?
Vioxx ‘Trial in a Box’
Cuts Cost of Filing Suit
Repeated Defect in Heart
Devices Exposes a History
of Problems
Heather Won Tesoriero
Product Liability
Barry Meier
Product Liability
STUDY QUESTIONS
1. Should A.H. Robins have introduced the Dalkon Shield when it did (“A.H.Robins”)?
Which legal theories of product liability (Clarkson, et al) may apply to A.H. Robins? Do
they have any defenses? What method of ethical reasoning seems most appropriate to this
problem?
2. In terms of litigating product liability cases can you draw any distinctions between the
Vioxx (“Vioxx ‘Trial in a Box’ Cuts Cost of Filing Suit”), and breast implants (“In Breast
Implants Scandal, Where Was Dow Corning’s Concern for Women?”) cases? Are there
moral hazards present in these cases or in product liability cases in general?
3. Have any fiduciary duties been breached in the Guidant heart device case (“Repeated
Defect in Heart Devices Exposes a History of Problems”) and can you identify any
market failures?
SESSION #3
DATE: JUNE 5
AGENCY & FIDUCIARY DUTY
READINGS
Disloyal Agents
Moral Hazard
Old City Enterprises
The Business Judgment
Rule & The Duty of Care
You Bought, They Sold
David Cavers
Robert Pindyck & Daniel
Rubenfeld
Lawrence Zicklin
Constance Bagley & Diane
Savage
Mark Gimein
Course Pack
Agency & Fiduciary Duty
(“Agency”)
Course Concepts
Agency
Board of Directors
Agency
STUDY QUESTIONS
1. Which fiduciary duties might be at issue in “Old City Enterprises”? Is Ed Stevens in
“Old City” acting properly in terms of shareholder interests and ethical standards? Are
there any moral hazards present here?
2. Considering the Gimein reading (“You Bought, They Sold”) what are appropriate
limits, if any, on sales of stock by corporate insiders? Does this behavior present any
moral hazards, particularly to shareholders?
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WHISTLE BLOWING & LOYALTY
READINGS
The Return of Qui Tam
Priscilla R. Budeiri
Aircraft Brake Scandal
Kermit Vandivier
He Told. He Suffered.
Kurt Eichenwald
Now He’s a Hero
A Whistle-Blower Rocks
Charles Haddad, with Amy
an Industry
Barrett
Doctor Explains Why He
Melody Petersen
Blew the Whistle”
How Ex-Accountant
James Bandler & Mark
Added Up To Trouble for
Maremont
Humbled Xerox
Course Pack
Whistle Blowing
Whistle Blowing
Whistle Blowing
Whistle Blowing
Whistle Blowing
Whistle Blowing
STUDY QUESTIONS
1. Consider the position of Searle Lawson in the “Aircraft Brake Scandal” case. At what
point, if any, should he have blown the whistle to someone outside B.F. Goodrich? Use
ethical concepts and reasoning to support your position.
2. Discuss the role(s) that whistle blowing laws play in the health care industry. Are these
laws primarily a mechanism for preventing health care fraud against the government (“A
Whistle-Blower Rocks an Industry”) or do these laws serve other purposes as well
(“Doctor Explains Why He Blew The Whistle”)?
3. Mark Jorgeson (“He Told He Suffered” - Prudential) and James Bingham (“How ExAccountant” - Xerox) worked at major corporations where they tried to bring truthful
accounting numbers to the attention of top management and investors. What personal
risks did they run? How did the outcomes of their cases reflect their different approaches
to whistle blowing?
SESSION #4
DATE: JUNE 12
BOARD OF DIRECTORS
READINGS
The Business Judgment
Rule
Our Schizophrenic
Conception of the Business
Corporation
Crisis of Corporate Ethics
Delaware Justices Uphold
Ruling on Disney
Severance
Constance Bagley & Diane
Savage
William T. Allen
Roy C. Smith
Rita Farrell
Course Pack
Board of Directors
(“Directors”)
Course Concepts
“Directors”
“Directors”
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Boeing CEO Resigns Over
Affair With Subordinate
Lessons From the Not
Always So Wonderful
World of Disney
Renae Merle
“ Directors”
Harvey L. Pitt
“Directors”
STUDY QUESTIONS:
1. Apply the Business Judgment Rule (Bagley) to the situations faced by the boards of
directors of Walt Disney (“Delaware Justices Uphold Ruling on Disney Severance”).
Was the action taken by the board of directors justified by the business judgment rule?
2. The nature of a corporation has been defined by Allen (“Schizophrenic Conception”).
Which conception of the business corporation do you think currently dominates the crisis
in corporate governance?
3. Does the issue of executive compensation reflect a failure in corporate governance
according to Smith (“Crisis of Corporate Ethics”)? Were any market failures created
when corporate executives were paid excessive amounts? And if so, how would you
remedy this situation?
INSIDER TRADING
READINGS
What is Insider Trading?
Raymond Dirks and Equity
Funding of America
The Case for Insider
Trading
The Cost of Inequity
http://www.sec.gov/answers/
insider.htm
Course Pack
Insider Trading
Roy C. Smith
Insider Trading
Henry G. Manne
Insider Trading
The Economist
Insider Trading
STUDY QUESTIONS
1. Should the accountant, Davidson, trade on the information he has obtained from Wolff
(“Accountant’s Small Time”)? Use legal theories of insider trading as defined by the
Securities and Exchange Commission http://www.sec.gov/answers/insider.htm (“What is
Insider Trading/”) and ethical concepts to support your position.
2. Why was Dirks reprimanded by the SEC but ultimately exonerated by the Supreme
Court? Use legal and ethical concepts to support your position.
3. Do laws forbidding insider trading make financial markets more or less efficient? Use
ideas from both economics and ethics to justify your position as well as including
Manne’s thesis (”The Case for Insider Trading”) on insider trading.
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SESSION #5
DATE: JUNE 19
CONTROL BY LAW
READINGS
Living with the
Organizational Sentencing
Guidelines
Prosecutors’ Tough New
Tactics Turn Firms Against
Employees
When the Company
Becomes a Cop
Deals & Consequences
The Thompson Memo,
U.S. Dept. of Justice.
1/20/2003
How Prepared Are
Companies for the Revised
Sentencing Guidelines?
The Convergence of
Principle and Rule-Based
Ethics Programs
Jeffrey Kaplan, Linda S.
Dakin, Melinda R. Smolin
Course Pack
Control By Law
Laurie P. Cohen
Control By Law
Linda Himelstein
Control By Law
London Thomas Jr.
http://www.usdoj.gov/dag/cftf
/corporate_guidelines.htm
Control By Law
Control By Law
Ronald Berenbeim
Control By Law
Ronald Berenbeim
Control By Law
STUDY QUESTIONS
1. How do you think the U.S. Sentencing Guidelines (“Living with the Organizational
Sentencing Guidelines”) might change corporate behavior? Consider this from the
perspective of the corporation as employer (“When the Company Becomes a Cop” and
“Prosecutors’ Tough New Tactics”).
2. Are the compliance costs of the U.S. sentencing guidelines justified (‘How Prepared
Are Companies for the Revised Sentencing Guidelines?”)? Would an ethics based
approach make implementation of compliance programs more effective (“The
Convergence of Principle and Rule-Based Ethics Programs”)?
3. What are the implications of the Corporate Sentencing Guidelines for employees and
judges? Consider the situation of Daniel Bayly from Merrill Lynch (“Deals &
Consequences”).
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DISCRIMINATION
READINGS
Equal Employment
Opportunity Commission
Sexual-Orientation
Protection Added to New
York Law
Foreign Assignment
Fear of Firing
Can Employers Alter
Hiring Practices to Cut
Health Costs?
Mind If I Peek At Your
Paycheck?
http://www.eeoc.gov
Course Pack
Discrimination
Casey J. Dickinson
Discrimination
Thomas Dunfee and Diana
Robertson
Michael Orey
Ann Zimmerman
Discrimination
Brian Hindo
Discrimination
Discrimination
Discrimination
STUDY QUESTIONS
1. In the “Foreign Assignment” case, how would you judge the actions of Bill
Vitam? Use ethical concepts as well as the law, to justify your position. According to the
EEOC, can the bank (employer) be held liable for sexual harassment created by its
employees? Does the bank have any affirmative defenses according to the Equal
Employment Opportunity Commission (http://www.eeoc.gov)?
2. Should pay discrepancies be treated differently than other forms of discrimination
(“Mind If I Peek at Your Paycheck?”)? Justify your position.
3. Is discouraging unhealthy job applicants a form of discrimination (“Can Employers
Alter Hiring Policies to Cut Health Costs?”)? What about avoiding hiring capable
applicants who fall within a “protected class” due to potential litigation costs (“Fear of
Firing”)?
SESSION #6
DATE: JUNE 26
SOCIAL RESPONSIBILITY TO STAKEHOLDERS
READINGS
The Social Responsibility
Milton Friedman
of Business is to Increase
Its Profits
Our Schizophrenic
William T. Allen
Conception of the Business
Corporation
Restricted Reasons and
Arthur Isak Applbaum
Permissible Violation
Cut Loose
Anne-Marie Cusac
Course Pack
Social Responsibility
Course Concepts
Course Concepts
Social Responsibility
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Credit Card Companies
Target New Niche: the
Mentally Disabled
The Right Thing: When
Good Ethics Aren’t Good
Business
Joseph Cahill
Social Responsibility
Jeffrey Seglin
Social Responsibility
STUDY QUESTIONS
1. What advice would Friedman (“The Social Responsibility of Business is to Increase
Profits”) and Allen (“Our Schizophrenic Conception of the Business Corporation”) give
to the CEO of a credit card company? Would you agree with Friedman and/or Allen? Use
ethical methods and concepts of fiduciary duty to support your position.
2. Did the CEO of Smith & Wesson fulfill his fiduciary duties (“The Right Thing”)?
Justify your position. How would Applbaum (“Restricted Reasons & Permissible
Violation”) judge his behavior?
3. Does IBM owe any duty to Asbeck (“Cut Loose”) regarding his health care benefits
upon retirement? How would Allen (Schizophrenic Conception”) and Friedman
(“Increase Profits”) respond to IBM’s behavior?
MORAL STANDARDS ACROSS BORDERS
READINGS
United States Bill of
Rights
In Praise of Cheap Labor:
Bad Jobs at Bad Wages…
Human Rights on the Eve
of the 21st Century
Universal Declaration of
Human Rights
The Oil Rig
For Cruise Workers, Life
is No “Love Boat”
Lives Held Cheap in
Bangladesh Sweatshops
Evildoers? How the West’s
Net Vanguard Toils
Behind the Great Firewall
of China
http://www.usinfo.state.gov
Course Pack
Moral Standards
Paul Krugman
Moral Standards
His Holiness the Dalai Lama
Moral Standards
http://www.un.org
Moral Standards
Joanne B. Ciulla
Joshua Harris Prager
Moral Standards
Moral Standards
Barry Bearak
Moral Standards
Mure Dickie & Stephanie
Kirchgaessner
Moral Standards
STUDY QUESTIONS
1. According to the “United States Bill of Rights” and the “Universal Declaration of
Human Rights” have any basic human rights been violated in the “Oil Rig” case? Are the
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ex-pats justified in getting better treatment than the Angolans?
2. Should cruise workers that service US ports enjoy the rights of other US workers (“Life
Is No Love Boat”)? Are sweatshops unethical according to Krugman (“In Praise of
Cheap Labor”) or the Dalai Lama?
3. Do human rights exist? If so, as a corporation how would you apply these ideas to
workers in Bangladesh (“Lives Held Cheap in Bangladesh Sweatshops”)?
4. Is Google ethically justified in restricting internet access in China (“Evildoers? How
the West’s Net Vanguard Toils”)? Apply ethical concepts in support of your position.
What about from the human rights perspective (Universal Declaration of Human Rights
& Dalai Lama)?
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