Identify All The Stakeholders Impacted By Roger’s Decision

Identify all the stakeholders impacted by Roger’s decision and evaluate the ethical conflicts faced by Beth Sullivan

Describe the case involving Roger McDaniels, a CFO at Solodor Pharmaceuticals (SP), who utilizes internal funds for personal gain by purchasing shares in a company that is about to be publicly announced, based on insider information. Outline the ethical dilemmas encountered by Beth Sullivan, an internal auditor, who discovers Roger’s misconduct and faces the decision of whether to report it, considering legal protections offered by the Sarbanes-Oxley Act.

Assess whether Beth Sullivan acted ethically by reporting Roger’s misconduct, examining the ethical conflicts and the implications of her action within the context of corporate governance and legal frameworks.

Paper For Above instruction

The case of Roger McDaniels, CFO of Solodor Pharmaceuticals (SP), presents a complex ethical dilemma that involves multiple stakeholders and conflicting moral considerations. This scenario highlights issues of insider trading, corporate governance, legal compliance, and ethical responsibility, which are central themes in business ethics and professional conduct.

Stakeholders affected by Roger’s decision include SP's shareholders, employees, and management; patients relying on Celenza for treatment; potential investors like Cambridge; regulatory agencies such as the SEC; and the broader community and public health sector. Each party's interests and well-being are influenced by the unethical conduct of insider trading.

Shareholders and investors are directly impacted because Roger’s insider purchase of Dugas Incorporated shares, using corporate funds, was based on confidential information that would significantly affect stock prices once made public. The traders who capitalize on inside information violate trust and distort fair market operations, ultimately harming those who trade without such privileged insights. Furthermore, the employees and management of SP face reputational risks and potential legal liabilities, which could threaten their jobs and the company’s future if regulatory violations are uncovered.

Patients awaiting the development of Celenza may be indirectly affected by corporate actions if financial pressures lead SP to compromise safety or delay product development. The potential acquisition by Cambridge also bears significance, as its control may influence strategic decisions, marketing strategies, and access to medication, affecting public health outcomes and pricing policies designed to maximize social welfare.

Legal conflicts arose from Roger’s use of corporate funds for personal advantage, constituting insider trading, securities fraud, and breach of fiduciary duty. Beth Sullivan, another key stakeholder, faced a moral and legal decision when she discovered Roger’s misconduct. The ethical conflicts hinge on her duty to uphold the law and corporate integrity versus her loyalty to her employer and her desire to avoid personal repercussions.

From an ethical standpoint, Beth Sullivan's dilemma involves balancing loyalty to her employer against her obligation to act in accordance with legal standards and ethical norms. The Sarbanes-Oxley Act (SOX) provides protections for whistleblowers, encouraging employees to report misconduct without fear of retaliation. In this context, reporting Roger’s behavior aligns with ethical principles of honesty, integrity, and responsibility, as it seeks to prevent further illegal activities and protect shareholders and other stakeholders.

Whether Beth acted ethically depends on whether her decision to report was motivated by a genuine concern for legality and corporate responsibility, or merely by self-interest. Her decision to inform the board, supported by protections under SOX, demonstrates her commitment to ethical conduct and the public good. Conversely, ignoring or concealing the misconduct would have perpetuated illegal behavior, betrayed stakeholder trust, and potentially harmed public health outcomes, especially considering the sensitive nature of pharmaceutical research and development.

In conclusion, Beth Sullivan acted ethically by choosing to report Roger’s insider trading, guided by both her moral principles and legal protections. Her action exemplifies ethical responsibility, courage, and the importance of internal controls and oversight in maintaining corporate integrity. This case underscores the necessity for organizations to foster a culture of transparency and accountability, emphasize legal compliance, and uphold ethical standards to safeguard stakeholder interests and promote trust within the business environment.

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