Think “It’s Unethical, But Legal”? Think Again? Academy of Business Journal, 1, p. 107-115. (2015).
Until recently, many bank executives and employees have been operating under the oft-repeated mantra of “it’s unethical, but legal”. Under our ethics-based American Rule of Law, as many financial institutions are now painfully and “unexpectedly” discovering, this is often not the case. Because ethical standards are sometimes not enforced for long periods of time, many come to believe that their unethical behavior is therefore “legal”. However, American Rule of Law, under the right circumstances, can and will swiftly change “overnight” into an enforcement juggernaut that must enforce the necessary ethical standards required to keep and retain trust in our financial system. Many financial institutions and their executives have been blind-sided by how quickly the deals they made that caused the financial crisis have cost them huge multi-billion dollar settlements. Already, banks may be facing more than $120 billion in liability – and this may only be the tip of the liability iceberg. Not understanding the simple and clear ethical principles of American Rule of Law can not only be hazardous to your wealth; it can land you in jail. So, what is ethical? What is legal? And when is unethical likely to also be illegal and why? This paper reviews some of the recent lawsuits and settlements with a view to answering these questions.