FBE 458 Law, Finance and Ethics
Spring 2012
Instructor
Instructor:
Office:
Office Phone:
E-mail:
C. Kerry Fields
ACC 232B
213-740-9307
fields@usc.edu
Lecture Class
Section:
Time:
Location:
Units:
15367R
Mon. & Wed. 2:00 – 3:50 p.m.
MHPB7B
4
Office Hours
Mon. & Wed.:
8:30-9:30 a.m.,
12:00-1:30 p.m.
and by appointment
Course Description
This course covers the practical aspects and strategies of financing and managing businesses
from incubation to going public. Blending both legal and ethical approaches to problem solving,
the course material includes agency law, legal aspects of starting businesses, sole
proprietorships, general and limited partnership law, limited liability companies, franchising and
special forms of business, administrative law, credit, secured transactions, bankruptcy, liability
of accountants, corporate law, corporate governance, mergers and acquisitions, securities and
finance law, and antitrust law.
Course Objective
The purpose of this course is to provide students with practical legal knowledge of specific
substantive business law topics and current legal trends and issues. This course is structured on
the premise that legal knowledge is a personal and strategic asset. The course coverage includes
many of the topics on the C.P.A. examination. The student will secure the knowledge necessary
to effectively work in private and public business entities by acquiring a sound grasp of the
relevant concepts, legal vocabulary, and rules of law that apply. Students will contribute to their
own learning by presenting both legal and business ethics case studies to the class. Actual cases
FBE 458 Sp. 2012.rev 01.06.12
1
involving substantive legal and ethical issues relating to those cases will be analyzed and
presented. The course provides the long-term benefit of spotting potential legal and ethical
problems and issues.
Learning Objectives
At the conclusion of the course, students will know the general principles of business law and be
able to identify and distinguish legal issues. They will acquire the legal terminology of business
organization and finance. They will have improved their deductive reasoning skills and
knowledge of both basic and advanced topics within the subject matter presented. Students will
be able to identify legal issues and apply the applicable rules to legal regulations, ordinances and
judicial decisions. They will recognize ethical conflicts in the governance of business
organizations and be able to distinguish alternative actions to pursue.
Required Materials
Business Law (7th Edition)
Author: Henry R. Cheeseman
Publisher: Prentice Hall (2010)
ISBN-10:0136085547
ISBN-13: 9780136085546
A subscription to the Wall Street Journal.
Office Hours
If students have any questions about the material covered in the class they should not hesitate to
see me. However, if a student cannot make the regular office hours, they should send me an
email to schedule an appointment. I can also be reached at 213-740-9307 where students should
leave a message on my voice mail with their name and phone number (with area code). Email is
the preferred method to contact me to schedule an appointment as the messages are checked
frequently.
Prerequisites
Other than an interest in learning about the legal and regulatory environment in which business is
conducted, there are no prerequisites for this course. This course is part of the minor in Business
Law offered by the Marshall School of Business.
Course Notes
Copies of lecture slides and other class information are available through your Blackboard
account. Prior exams are posted without answers. Questions are provided without answers as
students should use them as a learning tool. Since legal analyses are fact dependent a minor
change in the statement of the facts can result in a different answer in a law course examination.
The material on your exam will vary from the one posted due to changes in the textbook, topics
FBE 458 Sp. 2012.rev 01.06.12
2
of interest during the semester, differing course coverage and class interest in particular topics
different than that covered in this course.
The material presented and the classroom discussions are for the students’ edification. They are
not intended to be legal advice to students in connection with any legal issue they or others may
have. If students have a legal matter, they are advised to promptly consult an experienced
attorney who can confidentially and fully review the facts and advise them of their legal rights
and remedies. Quite often, the facts dictate the result and only in the context of an attorneyclient relationship can they be reviewed and legal opinions rendered.
Grading Summary
The course grading is based on the following criteria:
Assessment
1st Midterm Exam
2nd Midterm Exam
Team Presentation/IRAC
Attendance (4 out of 5)
Quizzes/in class participation
(6 out 7)
Final Exam
Total Points
Maximum points
150
150
50
40
60
150
600
Exam Dates
st
1 Midterm Exam
2nd Midterm Exam
Final Exam
Date
February 6, 2012
March 28, 2012
May 7, 2012
Time
During class
During class
2:00 – 4:00 p.m.
Course Grading Policy: Marshall’s target mean GPA is 3.0 for required classes and 3.3 for
electives. The mean target for graduate classes is 3.3. Assignment/Exam Grading Policy: the
instructor determines what qualifies as an accurate grade on an assignment, exam, or other
deliverable, and the instructor’s evaluation of the performance of each individual student is the
final basis for assigning grades for the course. (Content provided by Marshall to instructors).
Students’ grades for this course depend upon their performance and the grading standards and
policies of the Marshall School of Business, and the academic policies and procedures of the
University. For elective courses, such as this one, the suggested mean GPA is 3.3. There is no
specific guideline with respect to the number or percentage of any specific grade given or the
numbers of persons who pass or fail the course. Thus, discretion is given to each instructor
regarding the assignment and distribution of grades.
As to their ongoing status in the class, students will receive a grade but the more important
performance predictor is their class rank. Rank is more important than the interim letter grade
FBE 458 Sp. 2012.rev 01.06.12
3
because at the end of the semester, all pending letter grades are “curved” to ensure compliance
with these policies. (e.g. if there are too many scores at a particular letter and grade point, then
the cut-off for a letter grade is raised and the scores below that cutoff require that a reduced letter
grade(s) be assigned to ensure compliance with the Marshall grading policies. That is why rank
is a better predictor of a student’s performance). Once these curves are in place, they will not be
reset to accommodate individual requests. No relief will be granted on that basis. Grades are not
open to negotiation. Petitions for exceptions or understanding of particular needs to attain a
higher grade for some reason will not be honored. What is done for one student must be done for
all, and the result is that if one student’s grade is adjusted, so will all other students’ grades.
Preparation for class: Students are expected to read each week’s reading and case assignments
prior to class, and be prepared to discuss and examine them. In order to make the class periods
as engaging as possible, there will be a concentration on the application of the material. Students
should always proceed to the next reading assignment whether the previous reading has been
fully discussed in class.
Exams: Generally, the material is unique to each exam; however, students may be asked to
compare and contrast a substantive law rule with one learned earlier in the course. While every
examination will ask students to recognize definitions, the focus of the examinations will be on
the application of the legal principle involved. Students are strongly encouraged to form and use
a study group in their learning of the material, well in advance of the exam dates. Cooperative
learning is important as it will assist students in identifying their areas of weakness in advance.
Presentations and IRACs: During the first week of the course, students will select a team and
to present during the course. Information is to be focused upon the case, law, regulation or case
study at issue. You will present the material in PowerPoint form to the class. Be well prepared
and give a strong presentation to earn maximum points. Be prepared to discuss any ethical
issues related to your presentation.
 Each team will be allowed a maximum of 15 minutes to present.
 E-mail your slides to me by 9 p.m. of the day prior to your presentation. Bring your
presentation materials to class on a USB. Hand me a copy of the presentation when you
begin your presentation.
 A separate file is posted on Blackboard to assist you in your presentation of a judicial
decision in IRAC form (Issue, Rule, Analysis and Conclusion). The file is entitled
Briefing a Case.
Presentations are graded as follows:
Start with 50 Points
Deducts
0-50 for lack of depth in substantive material covered
0-35 for quality of presentation (e.g. reading the material,
obviously unprepared, disjointed, incomplete table of
authorities)
0-40 for lack of full participation by each team member/
lack of contribution, exceeding time limit, failure to eFBE 458 Sp. 2012.rev 01.06.12
4
mail presentation by 9:00 p.m. of prior day
Missing team members will receive no credit unless prior
arrangements have been made with me and been
confirmed by email
Total
Attendance checks: Students do not need to email me in advance that the student will miss
class on a particular day. We will take one extra attendance check during the semester so that
each student may have a personal reason for not making a class. Such prior email notice to me is
required only if a student were to miss several classes in a row for legitimate, verifiable reasons.
In all cases regarding attendance credit, I reserve the right to make a decision based upon the
exercise of my sole discretion.
In class participation: Quizzes and in class participation may occur electronically and or in
written form. You will need a computer with wireless internet connectivity or a cell phone with
text messaging capability. If you have neither resource, please make alternative arrangements
with me during the first week of class. Always bring your computer or cell phone to class. Note,
you are required to check the grade book posted on Blackboard on a weekly basis to ensure you
have been credit by the www.polleverywhere.com// software. Should you fail to do so, you will
not receive points later as grades and class rank are constantly updated in this course. Absent a
verifiable medical emergency or similar occurrence quizzes may not be made-up.
Makeup Exams and Grading Issues: Make-up midterms will be given only in exceptional
circumstances and will require prior arrangements. Student-athletes and others with verifiable
schedule conflicts with the exam schedule must arrange for an alternate test and testing date one
week prior to an exam date. No protests of unclear erasures of Scantron answers or failing to
complete the key on a Scantron will be honored.
You will leave the exam room with your copy of the exam. The exam answer key will be posted
following the exam. If you disagree with a posted answer, you must do the following within 24
hours of the posting of the answer key for each exam:
 email me with the following information:
o the name of the course,
o the version number of the test,
o the question involved, and,
o your complete analysis and argument of why your choice is the best of those
presented within 1 calendar day of the examination. Your arguments are to be based
upon what has been taught in the course. Arguments based upon analyses extracted
from web-based sources are not read.
After the protest period has ended, no further discussion of the answers will be entertained. The
curve will be set for the class one day following the examination.
The course gradebook is updated and posted weekly. You are responsible for verifying that your
grades are properly recorded. The last day to make any correction to the gradebook is the last
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day of class. No gradebook corrections will be made thereafter, including after the final exam is
taken.
Statement for Students with Disabilities
Any student requesting academic accommodations based upon a disability is required to register
with Disability Services and Programs (DSP) each semester. A letter of verification for
approved accommodations can be obtained from DSP. Please be sure the letter is delivered to
me as early in the semester as possible. DSP is located in STU 301 and is open 8:30 a.m. – 5:00
p.m. Monday through Friday. The phone number for DSP is (213) 740-0776. Please provide the
appropriate form one week in advance of an examination. (Content provided by Marshall to
instructors).
If you are taking an examination at the DSP office and believe that a question is unclear,
incomplete, ambiguous or otherwise defective, you are advised to attach additional pages to the
examination placed at DSP. If you are making such a contention, then, you are required to state
clearly the problem you encountered with the question and why you answered the question in the
manner you did. Only with such information in hand at the time I grade your examination will I
be able to gauge the appropriateness of giving you credit for your answer to the subject question.
If for some reason, you must take the examination after the class has taken the examination, you
will take a comparable examination to that given the students in class. You will not receive the
same examination as your classmates as all students leave an exam with a copy of the exam
questions.
Add/Drop Process
http://www.usc.edu/dept/publications/cat2011/academic/policies.html
In compliance with USC and Marshall’s policies classes are open enrollment (R-clearance)
through the first week of class. All classes are closed (switched to D-clearance) at the end of the
first week. This policy minimizes the complexity of the registration process for students by
standardizing across classes. You will be dropped from the class if you don’t attend the first two
sessions. If you decide to drop, or if you choose not to attend the first two sessions and are
dropped, you risk being not being able to add to another section this semester, since they might
reach capacity. You can only add a class after the first week of classes if you receive approval
from the instructor. (Content provided by Marshall to instructors).
Statement on Academic Integrity
USC seeks to maintain an optimal learning environment. General principles of academic honesty
include the concept of respect for the intellectual property of others, the expectation that
individual work will be submitted unless otherwise allowed by an instructor, and the obligations
both to protect one’s own academic work from misuse by others as well as to avoid using
another’s work as one’s own. All students are expected to understand and abide by these
principles. SCampus, the Student Guidebook, contains the Student Conduct Code in Section
11.00,
while
the
recommended
sanctions
are
located
in
Appendix
A.
http://www.usc.edu/dept/publications/SCAMPUS/gov//.
FBE 458 Sp. 2012.rev 01.06.12
6
Students will be referred to the Office of Student Judicial Affairs and Community Standards for
further review, should there be any suspicion of academic dishonesty. The Review process can
be found at: http://www.usc.edu/student-affairs/SJACS/ Failure to adhere to the academic
conduct standards set forth by these guidelines and our programs will not be tolerated by the
USC Marshall community and can lead to dismissal. (Content provided by Marshall to
instructors).
Any use of external assistance during an examination shall be considered academically
dishonest. The following are considered unacceptable examination behaviors: communication
with fellow students during an examination, copying materials from another student’s exam,
allowing another student to copy from an exam, the use of electronic devices to communicate to
others during the exam, possession or use of unauthorized notes, electronic or other dictionaries
during exams. Students cannot achieve grades that they have not legitimately earned. Part of
Marshall’s mission is to remind students of the value systems that will regulate their business
lives, and breaching ethical standards cannot be condoned.
Emergency Preparedness/Course Continuity
In case of emergency, and travel to campus is difficult, USC executive leadership will announce
an electronic way for instructors to teach students in their residence halls or homes using a
combination of Blackboard, teleconferencing, and other technologies. In such an event, we are
prepared to assign students a "Plan B" project that can be completed at a distance. For additional
information about maintaining this class in an emergency please access:
http://cst.usc.edu/services/emergencyprep.html//. (Modified content provided by Marshall to
instructors).
Other Course Policies
Electronic usage policy: Laptop and Internet usage is not permitted during academic or
professional sessions unless otherwise authorized by me. Use of other personal communication
devices, such as cell phones, is considered unprofessional and is not permitted during academic
or professional sessions. All electronic devices (including, but not limited to, iPads, computers,
cell phones, netbooks, laptops and other texting devices) must be completely turned off during
class time. Upon request, you must comply and put your device on your desk in off mode, face
down or in your book bag. You might also be asked to deposit your devices in a designated area
in the classroom. (Content provided by Marshall to instructors).
No recording and copyright notice. No student may record any lecture, class discussion or
meeting with me without my prior express written permission. The word “record” or the act of
recording includes, but is not limited to, any and all means by which sound or visual images can
be stored, duplicated or retransmitted whether by an electro-mechanical, analog, digital, wire,
electronic or other device or any other means of signal encoding. I reserve all rights, including
copyright, to my lectures, course syllabi and related materials, including summaries,
PowerPoints, prior exams, answer keys, and all supplementary course materials available to the
students enrolled in my class whether posted on Blackboard or otherwise. They may not be
reproduced, distributed, copied, or disseminated in any media or in any form, including but not
FBE 458 Sp. 2012.rev 01.06.12
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limited to all course note-sharing websites. Exceptions are made for students who have made
prior arrangements with DSP and me.
Incomplete Grades Explanation:
Grading and Correction of Grades handbook, found at:
http://www.usc.edu/dept/ARR/grades/gradinghandbook/index.html//.
An incomplete (IN) grade may be assigned due to an “emergency” that occurs after the 12th
week of classes. An “emergency” is defined as a serious documented illness, or an unforeseen
situation that is beyond the student’s control, that prevents a student from completing the
semester. Prior to the 12th week, the student still has the option of dropping the class.
Arrangements for completing an IN course should be initiated by the student, and negotiated
with the instructor. Class work to complete the course should be completed within one calendar
year from the date the IN was assigned. The IN mark will be converted to an F grade should the
course not be completed.
Course Readings
The following is a discussion of the course coverage:
1.
Ethics and Social Responsibilities
This is an introduction to our course, the sources of the law, and ethical decision-making.
Students will examine ethical theories and their contemporary applications. The language,
concepts and application of these theories will be addressed within the course objectives for this
course. The material in this unit will be applied throughout the entire course.
Ethical philosophy is not exacting or precise in character. It is an art of informal navigation
among conflicting choices. The purpose of this unit is to provide the student with the
information to make informed choices, and to illuminate the pathways to making those choices.
Students will sharpen their current abilities to identify, analyze and resolve the ethical dilemmas
they are required to address in their personal and professional lives.
The conflict between law, what one has a right to do, and ethics, what is right for one to do, is
the focus of this unit. The students should take with them a firm understanding and respect for
the conflicting ethical positions others assert.
2.
Introduction to Business Relationships
In this part of the course, the basic relationships that are the characteristics of doing business are
reviewed. The material covers the relationships between principals and agents and the basic
forms of operating a business.
3.
Other Forms of Doing Business
This section surveys the law of the substantive areas of partnership law, limited partnerships,
limited liability partnerships, limited liability companies and franchising. This unit covers many
of the forms of doing business. It is intended to address the relevant substantive law and to
highlight the potential rewards and risks in doing business in these forms. Throughout these
sections, the ethical conflicts arising within the operation of the business will be identified and
discussed.
4.
Administrative Law, Credit, Secured Transactions and Bankruptcy
FBE 458 Sp. 2012.rev 01.06.12
8
In this part of the course, the effect of specific statutory and regulatory treatment of the businessoperating environment will be addressed. The means and methods by which every facet of
business life is controlled by the regulatory process will be explored. The basic principles of
bankruptcy law and the procedures that most often are invoked by businesses as both creditors
and debtors will be reviewed. The federal Bankruptcy Code must be understood within the
context of state law. The relationships between bankruptcy law and those interests created and
protected under state law will be reviewed within the context of this unit. The basic elements of
secured transactions will be reviewed.
Each of these substantive areas presents unique circumstances for ethical conflicts to arise and
they will be considered during each segment of our study.
5.
Accountant’s Liability
Using the material from the text as our starting point, we will explore the developments of the
liability of accountants in light of the recent events that have involved public accounting firms
and major corporations.
The ethics coverage required by the AICPA Code of Professional Conduct and the California
Accountancy Act and Accounting Rules and Regulations will be addressed.
6.
Corporate Law
This section is a survey of the legal compliance issues addressed by the business manager in both
public and private corporations.
Aspects related to the law of agency and closely held
corporations will be addressed. Topics include principles of fiduciary law, shareholder voting,
derivative suits, executive compensation, and control transactions. The emphasis is on the
practical or legal aspects of a transaction, and not the finance aspects. This unit will also
address in summary form the events relating to a merger or acquisition. How the transaction can
be structured and implemented will be addressed. Highlights from the important aspects of a
mergers and acquisition practice will be addressed.
Case studies involving challenging ethical and corporate governance will be analyzed and
presented by students.
7.
Investor Protection and Online Securities Transactions
This part of the course introduces the two most important federal securities laws: the Securities
Act of 1933 and the Securities and Exchange Act of 1934. The material will also include the
relationship between disclosure obligations and anti-fraud rules, the duties of participants in
securities transactions.
The ethical lapses presented by recent corporate scandals will be highlighted and reviewed in
class.
8.
Antitrust Law
This section addresses the governmental control of economic transactions through the adoption
and enforcement of the antitrust laws. The major pieces of federal legislation and the key cases
in the areas addressed will be reviewed. Among the subjects covered are the following: the
collaboration among competitors through price fixing and other restraints of trade,
FBE 458 Sp. 2012.rev 01.06.12
9
monopolization, price discrimination and remedies available. Due to time constraints, economic
theory is not addressed in detail.
Course Schedule
Date
Material Covered
Miscellany
January 9
Introduction
Course introduction
Syllabus & ground rules
Teams formed
January 11
Ethics
Chapter 42: Ethics and
Social Responsibility of
Business
Ethics video
January 16
No Class
Martin Luther King’s Birthday
January 18
Agency
Chapter 29: Agency
Formation and Termination
Team Presentation 1: Ethics case
study
January 23
Liability of Principals and
Agents
Chapter 30: Liability of
Principals and Agents
Team Presentation 2: Ethics case
study
January 25
Small Businesses,
Entrepreneurs and
General Partnerships
Chapter 34
Team Presentation 3: 2 IRACs
from the end of the chapter
problems on liability of principals
and agents (Chap. 30).
January 30
Small Businesses,
Entrepreneurs and
General Partnerships
Chapter 34
Team Presentation 4: 2 IRACs
from the end of the chapter
problems on partnerships
February 1
Limited Partnerships and
Limited Liability Limited
Partnerships
Chapter 35: Limited
Partnerships
Team Presentation 5: 2 IRACs
from the end of the chapter
problems on limited partnerships
February 6
Midterm Examination #1
No team presentation
FBE 458 Sp. 2012.rev 01.06.12
10
February 8
Limited Liability
Companies and Limited
Liability Partnerships
Chapter 39: Limited
Liability Companies
Team Presentation 6: personal
and business lines of credit
February 13
Limited Liability
Companies continued
Team Presentation 7: Bond
rating agencies
February 15
Franchises and Special
Forms of Business
Chapter 40: Franchises and
Special Forms of Business
Team Presentation 8: Hedge
funds
February 20
No Class
President’s Day
Administrative Law
February 22
Chapter 43: Administrative
Law
Credit
February 27
February 29
March 5
FBE 458 Sp. 2012.rev 01.06.12
Team Presentation 9: Ethics case
study
Chapter 26: Creditor’s and
Debtor’s Rights
Team Presentation 10: 2 IRACs
selected from end of the chapter
problems on credit.
Secured Transactions
Team Presentation 11: Causes
for current recession; and
Chapter 27: Secured
Transactions and Electronic
Filing
Secured Transactions
continued
Bankruptcy
March 7
Video
Chapter 28: Bankruptcy and
Reorganization
Team Presentation 12: Ethics
case study
Team Presentation 13: 2 IRACs
selected from end of the chapter
problems on secured transactions.
Team Presentation 14: 2 IRACs
selected from end of chapter
problems
11
March 12
Spring Break
March 14
Spring Break
March 19
Bankruptcy continued
Liability of Accountants
Team Presentation 15: 2 IRACs
from the end of the chapter
problems on bankruptcy.
March 21
Chapter 51: Liability of
Accountants
Team Presentation 16: Case
study of high profile Chapter 11
bankruptcy proceeding
March 26
Midterm Examination #2
No team presentation
Corporations
March 28
Chapter 36: Corporate
Formation and Financing
Team Presentation 17: Where to
incorporate
April 2
Corporations contd. Start
Corporate Governance
Fields: Presentation on corporate
formation issues and alter ego
liabilities
April 4
Corporate Governance
Chapter 37: Corporate
Governance and SarbanesOxley Act
Team Presentation 18:
Corporate governance
April 9
Corporate Acquisitions
and Multinational
Corporations
Chapter 38: Corporate
Acquisitions and
Multinational Corporations
Video
FBE 458 Sp. 2012.rev 01.06.12
12
April 11
Review and analysis of
transactional
documentation of an
acquisition
Team Presentation 19: litigation
against directors
April 16
Securities Regulation
Chapter 41: Investor
Protection and Online
Securities Transactions
Team Presentation 20: IPOs
April 18
Securities Regulation
continued
Team Presentation 21: Securities
arbitration
April 23
Antitrust Law
Chapter 46: Antitrust Laws
and Unfair Trade Practices
Team Presentation 22: Current
U.S. antitrust case study
April 25
Antitrust Law continued
No team presentation
May 7
Final Examination
(2:00 p.m. – 4 p.m.)
Location:
Verify on Blackboard
END
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