Finance Fraud Arbitration vs Class Action - Case Study Example

CASE Finance fraud pits arbitration verses action Arbitration is a lawful procedure that is an alternative way of resolving conflicts. Arbitration takes place outside the court and involves selection of a neutral third party by the two sides referred to as an arbitrator. Arbitrator’s decision is final and the court rarely reexamines where both parties agree to the arbitrator’s award. Class action began in England during the seventeenth century as a bill of peace in the enquiry court. The judges would hear the bill in the English courts, if the number of litigants were large, then it would be impossible and impractical to join the claims in a lawsuit. Judgment would bid all group members. Question 1: Like other defrauded clients, Mr. Groetsch’s compensation should be in accordance to how much money he had lost through the Medical Capital Holdings security. In spite of Mr. Groetsch’s diagnosis with Alzheimer and his family’s request for Securities America not to do business with him, the stockholder still went ahead and sold him the securities. The arbitrator should consider his health condition, and the fact that his family’s request for no business transaction between him and the American securities. The Americans sold securities regardless of the internal memoranda of Securities America, questioning the legality of the Medical Capital. The concerns spread to brokers diagonally in the company, yet Securities America continued to sell the bonds. The stockholder could have taken advantage of Mr. Groetsch’s health condition to manipulate him into signing the transfer of Medical Capital securities. The characteristics of the disease include loss of memory severe enough to disrupt the normal activities of everyday. The stockholder knew that Mr. Groetsch could experience difficulties trying to maintain his memory ability and, therefore, defraud him. With Alzheimer, he would be unable to maintain employment, plan and execute tasks, to reason and exercise judgment (Fungate & Kinicki 299-305). Question 2 Since arbitration is less complex, cheaper and profitable, the judge should consider class action before arbitration. In this way, the court will compensate people that appealed for class action since they are the majority, and afterwards deal with Mr. Groetsch. Compensation of arbitration before class action may lead to depletion of funds and creation of fear caused by fewer funds available for the compensation of class action. Convincing Mr. Groetsch in case of a negative outcome is easier as compared to those in the class action, because one individual understand faster and better than a mass of people. Resolving Mr. Groetsch’s case may be hard since he might not remember some details regarding his case due to his illness. This can further bring in contradictions that may delay the ruling of the arbitrator leading to loss of time and money. Arbitration in this case may take longer and might be expensive due to the one party involved who may experience loss of some memories and record different statements regarding the same case. It is more convenient to look for funds of one individual compared to those in a class action. Class action case consume a lot of time since it involves many people with similar interests, and the judge has to make a fair decision as compared to arbitration where the judge needs to approve the decision of the arbitrator (Fungate & Kinicki 300-303). Question 3: In most cases, teamwork is the best hence; Mr. Groetsch should join class action that is likely to be favored by the judge. Since arbitration is no longer possible, he should contemplate on where the best ruling will be, since the judges spent time on the class action case. Representation by attorneys is one of the issues he ought to think about because the attorneys perform well to ensure their clients get what they deserve. In addition, joining the class lawsuits will make the judge’s work easier since he has to only deal with one case, and make an equal ruling in both cases. Fear of depletion of funds will not be there since the plaintiffs will have to share the funds equally. Therefore, the judge should convince Mr. Groetsch to join the class action lawsuits showing him the benefits of working together with the other defrauded fellows (Fungate & Kinicki 300-303). Question 4: Considerably, he should claim compensation in the insurance companies since most of the companies selling bonds insure themselves against risks that may occur in the running of the business. The insurance company ensures that the company uses funds available to compensate the victims. Mr. Groetsch can sue Ron Carazo, who was the broker, as a person and not the Security America Company. Despite Mr. Groetsch health, the broker still sold him the securities knowing well that his family had requested for no transaction of business between him and the company. Alternatively, he should sue those concerned with the operation of legal businesses in America since they have delayed or ignored the illegal selling of bonds to innocent citizens. The Americans disseminated the legality of the company to all brokers and yet it continued selling the securities for many years. These accusations may lead to immediate closure of the company and compensation of Mr. Groetsch (Fungate & Kinicki 300-305). Case 2 PART A Question 1: China is one of the leading countries in technology and probably in investments. A position in one of their companies is a privilege and a leeway to excellence in life. I would gladly accept the position, since one shift in occupation to another is because of better pay, working conditions and acquisition of new and advanced ideas. China being the largest steel company in the world is one of the best chances one could ever find and one should try to maintain it at all costs. Ethical behaviors should be encouraged in a working environment in order to acquire a good organization image. Those in power should practice ethnicity and avoid accusing others falsely. A position in the company will enable me serve justice through testifying against the company even if it costs me the job. This way people receive justice and ethnicity (Fungate & Kinicki 80). Question 2: Accepting a position in the steel industry would mean spoiling of the good relationship between the two companies, which has been there for many years. The disagreement between the two may lead to denial of iron supplies to the steel industry hence decline in the productivity of sin the industry. Reversing of accusations is a form of corruption, and the Chinese prosecutors highly practice this act. Engaging with the industry may mean accepting practice of corruption and to an extent maybe legalize corruption. Accepting the position may cost my job in case the two companies fail to understand each other regarding the issue of espionage. The job position may be a way of steel industry getting back at the iron company and, thus, position is a key to the leak of important information in the company. A letter addressed to the concerned facility manager in china informing him/her on how privileged I would be to join their company but circumstances could not allow. This will be due to the prosecution of the Rio Tinto Executives, whose charges the judges changed, in favor of the Chinese Company. In addition, the prosecutors did not explain why they had to switch the charges against the executives (Fungate & Kinicki 80). PART B Question 3: As the CEO of Rio Tinto company, all the businesses that involve China, should first pass to my desk for approval before any business is transacted with them. This will enable for complete acknowledgement of their documents. This will somehow clear doubts on the intensions of the China Companies. Managers should avoid signing a document if the terms of the document are not clear. Clarity reduces all possible doubts in given document. There will be no employee relationship between the two companies, which will reduce the leak of information outside the company. If an employee at Rio Tinto shares company information with that of the Chinese Company, the company will expel the employee. In this way, the company is able to maintain confidential information within the company. The partner is unable to attack Rio Tinto Company in any way. The company should not invest highly with the Chinese companies due to their convicts of persons arrested innocently. A case may arise where the Chinese company accuses Rio Tinto over fund issues, which may cause huge loss of the investments to the Chinese company. Low rate of investment will prevent the investment from being a subject of legal penalties in case of a dispute with their partners (Fungate & Kinicki 80). PART C Question 4: There will be no change of mind since conviction of innocent people is serious than fraud. This is because persons are made to suffer inside the dark and protected walls which are surrounded by armed guards who await to finish one off in case of an attempt to escape. Those behind bars are powerless in such a way that they cannot transact any business at all. Those defrauded are in a position to start or at least make an effort to invest again. Chinese police and prosecutors arresting and indict suspects for various offences then switch the course has prompted fear among investors, mining industries and foreign workers in China. This means that investing in China may be the cause of failure of a good investment. Rio Tinto on the other hand is a company where one has less fear to invest in due to the maintenance of a good image even though they had accepted the money from Chinalco, which is one of the largest state-owned mining Companies for investment. The company accepted the huge amount of money for a good reason, that is, investment. Through investment with the Chinalco mining company, those who have an investment in Rio Tinto will benefit in a big deal (Fungate & Kinicki 80). Case 3 A) Question 1 The National Public Radio should sue him of false identification and demand for O’Keefe reason for doing so. Through his actions, it tarnishes the image of the National Public Radio due to the doctoring of the secretly recorded interview during their lunch conversation with the Schaller. O’Keefe’s reason as to why he did the action should not be enough to cover for his mistakes. Creation of a lie may lead to the politicians acting in an unlawful way to eliminate those who come in their way. In this way, many will die innocently due to the selfishness of others. On seeing Schiller’s comments, those politicians that voted for the funding of the National Public Radio may withdraw their votes and leave the station unfunded. Some people support him saying that it is a good way of making people account for their actions. They argue that even some TV shows use hidden cameras to catch people doing bad things (Fungate & Kinicki 390-393). Question 2 Secret recordings and cameras is one of the best ways to expose those who hide underground doing shoddy deals. O’Keefe never broke the law but he was trying to figure out and expose what happens behind the cameras. Some of the TV shows use hidden cameras to expose who perform dirty deeds behind the cameras and no one asks them questions. O’Keefe in the same way was trying to enlighten those in the darkness. Those he make an exaggeration of the interview, his aim was to communicate the importance of presenting the actual information and not to twist the expected outcome. The trend has grown in such a way that the makers of ‘yes men’ anti-corporate jokers have released two movies and have opened a yes lab, which will train people on the dirty actions. Mike Bonanno, the confounder of yes men, says that due to defunding of mainstream media, there is the issue of less real reportage and people are getting money out of staff that should be observable. O’Keefe, therefore, has made the citizens see the light. In addition, the journalists should report according to how the information should be (Fungate & Kinicki 390-393). B) Question 1 In today’s technology, journalism is not only a matter of studying but also a calling. Citizens interested in journalism should make their own findings and report on them without interference. In this way, journalist will always report information intended for the public, and shoddy business will reduce or cease to exist. New journalist should practice citizen journalism worldwide, as it is a good method of enlightening the citizens. In addition, this manner of journalism assists to reduce cases such as those experienced by Schiller that was unethical and embarrassing to her as a person and the National Public radio. Doing citizen journalism in darkness will cost the dignity of many prominent people because the aim of the journalist will be to expose what they do when they are not on the cameras. Secret citizen journalism cost National Public Radio its rejection for support by the politicians who were voting for its funding (Fungate & Kinicki 390-393). The US senate voted to block the use of federal money by radio stations, which are public on programing. The public radio stations received this final blow due to the secret citizen journalism. Not all journalists are professionals because many of them relate and work in an unprofessional way, which makes the public question their professionalism. Schiller pretends to be a potential donor from the Muslim organization where they were to donate $5million. This was a mere lie because O’Keefe was the leader of the organization (Fungate & Kinicki 390-393). Question 2 O’Keefe did the right thing by exposing Schiller who pretended to be a potential donor of the Muslim organization. Schiller backstabbed the political organizations whereas he praises them in the eyes of the public. In this way, we are able to see the true colors of the reporters when what the reporters say in the darkness come to light. Many are setting secret cameras to attack those who think they can do what they want especially to deceive others. There are public TV shows that set cameras to capture people unawares and this stations still operate and there are no complains of closure. Reporters use secret cameras and recordings worldwide, as a way of earning a living and, thus, O’Keefe was one of the many who are earning from the citizen journalism. Exposure to the reporting methods by the public will promote better relation between the citizens and the journalists, where the public will alert the journalists on the happening and vice versa. Citizen journalism has in big deal come to help those who frame themselves as saints, taking for instance Schiller who makes politicians and their parties look like frauds where in the real sense they are the most affected (Fungate & Kinicki 390-393). Case 4 Question 1: The school goal is to acquire finally the highest levels of education that the school can offer. The lecturer will be the greatest help since he has the knowledge on the unit he teaches and in this way, the lecturer transfers knowledge to me in a more advanced way. Tactics such as consultation, inspirational appeals, ingratiation and personal appeals are the best ways to make the lecture help me achieve the goal (Fungate & Kinicki 357-359). Consultation comes in when there is less or no understanding of a particular issue in class or difficulties in understanding some read outside the class. This method makes the concerned lecturer provide reference materials that aid in better understanding. They may even go to an extent of doing the research themselves (Fungate & Kinicki 357-359). Ingratiation is a way of being accepted or gaining affection. The students can do this through social relation with the lecture where one is able to share various issues where they are able to understand one. Social relations enable both parties to acquire trust for each other, which is an advantage to the student (Fungate & Kinicki 357-359). Inspirational appeal is also a good weapon to achieving a goal. Inspiring others not only through academics makes, they see life in a different perspective and, thus, living with the hope of a better tomorrow. Positive attitude towards something makes a person focus and always try to see the brighter side of the future. The inspirations may make the lecturer feel the urge of empowering someone through different ways (Fungate & Kinicki 357-359). Question 2: People use power as a way to woe the support of others. In most cases, those who possess power have money, thus, they take advantage to make others suffer mercilessly. The new view of power is the ability to use what someone possess in order to help others acquire what they require. There are different categories of power, which include reward power, coercive power, legitimate power, expert power and referent power. The different types of powers help a person to acquire different life skills that help them to cope with different situations. The top management performers in school or work places making them put effort to receive another reward. In case of legitimate power, juniors in an organization relay on information from the top managers, which helps in better planning of the organization duties (Fungate & Kinicki 357-359). Question 3: In this company, there is a show of empowerment, where power is more concentrated on the seniors and less power shared by the juniors in the company. The seniors made less consultation to the juniors since they had more power enough to make decisions on their own. Empowerment requires both the top and those at the lower level of management. In this company, the seniors made poor decisions since no top ranked employees would consult those at the lower levels. Empowerment entails division varying degrees of power and the authority of making decisions in an organization. Power concentration on one side lowers the company’s performance, and its ability to reach the expected goals in its year of operation. Randolph’s model suggests that empowerment needs sharing of important information actively and transfer control power from the managers to the teams. Teamwork should be highly practiced, trust and training is the best key to empowerment. Training involves understanding on how a given company operates its daily activities (Fungate & Kinicki 357-359). Question 4: Uncertainty is the state of having doubts on particular issues. Organizational politics are intentional acts to protect the self-interests of individuals or groups. Having doubts on issues triggers selfish acts in ones’ mind and, thus, people tend to perform acts that tend to favor them. Corruption may be practiced in the company since the people involved has developed acts of protecting self-interests rather than protecting the interests of the investors. Uncertainty may cost the image of the company because many may view uncertainty as an act the company whereas the individuals have developed the habits (Fungate & Kinicki 357-359). Politicking occurs mostly in the case of a coalition where different individuals have different self-interests and are unable to agree with their partners. At this level, the employee may want to fulfill interests that do not concern the organization in way. The selfish employees with uncertainty will overstretch the company resources leading to low production causing low sales, thus, overall decrease of employee salaries. In the same organization, there are groups or individuals who have the interests of the company at heart and not willing to risk their jobs because of selfish individuals in the company. The good and faithful employees report any unethical behaviors in the company leading to disagreements within the working environment (Fungate & Kinicki 357-359). Work Cited Fungate, M. &. Kinicki, A. Organizational behavior, key concepts, skills & best practices. New York: McGraw-Hill/Irwin, 2012. Print Read More