CAN THO UNIVERSITY

SCHOOL OF ECONOMICS
FACULTY OF INTERNATIONAL BUSINESS


BUSINESS ETHICS
READING LOG

Lecture: : Prof. Ingyu Oh

Student name : Nguyễn Trường Phát

ID : B2206585
Date of : 28.02.2024
submission

Janunary 2023
 CHAPTER 1
1.Ethical Relativism: is a philosophical theory that suggests
that moral principles are not universally applicable or absolute
but are instead relative to individuals, cultures, or societies.
This means that what is considered morally right or wrong can
vary depending on the context, cultural norms, or individual
perspectives.

*Case study: Animal rights (Ethical relativism is clearly visible

in the treatment of animals. Some individuals and cultures advocate
for vegetarianism and the ethical treatment of animals, while others
engage in hunting for sport without ethical qualms.) activities sav
e 32 rabbits in Ankara
In a heartwarming act of compassion, animal rights activist
s have rescued 32 rabbits out of nearly 100 rabbits abandoned
along the side of the highway in the capital Ankara.
On Jan. 19, the Patikara Animal Protection Association r
eceived a report that nearly 100 rabbits had been dump
ed on the side of a highway in the Temelli area. In respo
nse, members of several small animal rights NGOs, incl
uding the Patikara Association, went to the site. The vol
unteers were surprised to see so many rabbits in the ar
ea.They worked day and night in difficult weather and t
errain conditions with the equipment they could find su
ch as nets, traps and flashlights to catch the rabbits. In
one week, 32 rabbits were caught and one pregnant rab
bit had two babies."We think that an illegal breeder wh
o was about to be raided dumped the rabbits in the are
a, because the rabbits are very well-groomed. They are
very difficult to catch. We continue to work. We were ab
le to take 32 rabbits under protection. There are also ra
bbits that died. All the captured rabbits were taken to p
rivate clinics by volunteers," Yağmur Hasdemir, preside
nt of Patikara Animal Protection Association, explained.
Stating that animal associations were in dire need of vo
lunteers and equipment support, Hasdemir said, "Ther
e is an animal disaster that is beyond us as volunteer as
sociations. We will sterilize and put the rabbits up for a
doption. We will give them to secure farms. One of the r
abbits we caught two days ago gave birth. The mother
and her babies are in an incubator. They were born safe
ly in a clinical environment."

(http://hurriyetdailynews.com)

2.Utilitarianism: is a consequentialist ethical theory that was

developed by philosophers such as Jeremy Bentham and John
Stuart Mill. The central idea of utilitarianism is that the
morality of an action is determined by its overall consequences.
In other words, an action is considered morally right if it
produces the greatest amount of overall happiness or pleasure
and minimizes pain or suffering.

*Utilitarian Case Study: Jeremy Bentham

What Mill names the “proof” of utilitarianism belongs

presumably to the most frequently attacked text passages in the
history of philosophy. Geoffrey Sayre-McCord once remarked
that Mill seems to answer by example the question of how many
serious mistakes a brilliant philosopher can make within a brief
paragraph (Sayre-McCord 2001, 330). Meanwhile the secondary
literature has made it clear that Mill’s proof contains no logical
fallacies and is less foolish than often portrayed.
It is found in the fourth part, “Of What Sort of Proof the
Principle of Utility is Susceptible”, of Utilitarianism. For the
assessment of the proof two introductory comments are helpful.
Already at the beginning of Utilitarianism, Mill points out that
“questions of ultimate ends are not amenable to direct proof.”
(CW 10, 207). Notwithstanding, it is possible to give reasons for
theories about the good, and these considerations are
“equivalent to proof” (CW 10, 208). These reasons are empirical
and touch upon the careful observation of oneself and others.
More cannot be done and should not be expected in a proof re
ultimate ends.

A further introductory comment concerns the basis of

observation through which Mill seeks to support utilitarianism.
In moral philosophy the appeal to intuitions plays a prominent
role. They are used to justify moral claims and to check the
plausibility of moral theories. The task of thought-experiments
in testing ethical theories is analogous to the observation of facts
in testing empirical theories. This suggests that intuitions are the
right observational basis for the justification of first moral
principles. Mill, however, was a fervent critic of intuitionism
throughout his philosophical work. In his Autobiography he
calls intuitionism “the great intellectual support of false
doctrines and bad institutions.” (CW 1, 232). Mill considered
the idea that truths can be known a priori, independently of
observation and experience, to be a stronghold of conservatism.

His argument against intuitionistic approaches to moral

philosophy has two parts. The first part points out that
intuitionists have not been able to bring our intuitive moral
judgments into a system. There is neither a complete list of
intuitive moral precepts nor a basic principle of morality which
would found such a list(CW 10, 206).
( iep.utm.edu)
 CHAPTER 2
1.Harm Principle: is a concept in ethics and political
philosophy that was prominently articulated by the 19th-century
philosopher John Stuart Mill in his work "On Liberty." The
principle is a foundational element of liberal thought and
emphasizes the limits of societal intervention into individual
liberty. The core idea of the Harm Principle is succinctly
expressed by Mill in the following way:
"The only purpose for which power can be rightfully exercised
over any member of a civilized community, against his will, is to
prevent harm to others."
In essence, the Harm Principle asserts that the use of coercion
or interference with an individual's freedom is only justified
when that individual's actions pose a direct and significant
harm to others. According to Mill, individuals should be free to
pursue their own interests and make their own choices as long
as those choices do not cause harm to others.

* Case study: Robert Latimer a Canadian farmer who killed

his severely disabled child, and explores the ethical implications
using John Stuart Mill's Harm Principle. The essay delves into
Mill's argument for the Harm Principle, emphasizing individual
liberty and the prevention of harm to others as the only
justifiable limitations on freedom. Mill's assertion that
individuals should be free to pursue their beliefs and ideas as
long as no harm is done to others is examined in the context of
Latimer's case. The analysis points out the strengths of Mill's
argument, such as the promotion of personal development
through individuality and freedom of thought. However, it also
highlights gaps in Mill's philosophy, particularly in defining the
limits of liberty and harm. The text suggests that Mill's emphasis
on personal freedom may not adequately address situations
where an individual's choices can be harmful to themselves or
others.In conclusion, the text raises questions about the
applicability and limitations of Mill's Harm Principle, especially
when dealing with complex ethical dilemmas like the Latimer
case. It points out potential weaknesses in Mill's arguments,
urging a careful consideration of the balance between individual
liberty and the prevention of harm in ethical and legal
discussions.

(fromemuseum.org)

2.Virtue ethics: is a moral philosophy and theory of normati

ve ethics that emphasizes individuals’ character and
personality traits instead of their actions.

*Case study: Rajat Gupta and Insider Trading

In September 2008 Warren Buffet agrees to pay $5 billion to
Goldman Sachs in exchange for preferred shares in the
company. This news is likely to raise the share price of
Goldman Sachs. The news is not supposed to be announced and
made public until the end of day. Less than a minute after the
board approved the Buffet purchase, Rajat Gupta calls his
longtime friend Raj Rajaratnam, a hedge fund manager and
billionaire founder of Galleon Group. Once Rajaratnam gets this
information, he immediately buys shares of Goldman Sachs.
Next day when the stock market opens, Raj Rajaratnam makes
nearly $1.2 million in profits as Goldman Sachs shares rose. The
SEC estimates the tip leaked by Rajat Gupta generates profits
and avoids losses of more than $23 million.
(sevenpillarsinstitute.org)

CHAPTER 3
1.Greenwashing: is a deceptive marketing practice in which a
company, organization, or product gives a false or exaggerated
impression of its commitment to environmental responsibility or
sustainability. It involves presenting misleading information or
using misleading labels to create a green or eco-friendly image,
even when the entity's actual practices or products may not
align with such claims. The term is derived from the
combination of "green," representing environmental
friendliness, and "whitewashing," which means to cover up or
gloss over undesirable facts. Greenwashing can mislead
consumers and undermine efforts towards genuine
environmental stewardship.

*Case study:Nestlé’s Plastic Initiative Called

‘Greenwashing’ by Greenpeace
In 2018, Nestlé released a statement saying that it had
“ambitions” for its packaging to be 100% recyclable or reusable
by 2025. However, environmental groups and other critics
pointed out that the company hadn’t released clear targets, a
timeline to accompany its ambitions or additional efforts to help
facilitate recycling by consumers. Greenpeace reacted to this by
releasing its own statement, in which it said, “Nestlé’s
statement on plastic packaging includes more of the same
greenwashing baby steps to tackle a crisis it helped to create. It
will not actually move the needle toward the reduction of single-
use plastics in a meaningful way, and sets an incredibly low
standard as the largest food and beverage company in the
world.” In Break Free From Plastic’s 2020 annual report, Nestlé,
along with Coca-Cola and PepsiCo, were named the world’s top
plastic polluters for the third year in a row.
(www.ecowatch.com)

2.Triple bottom line: is a concept that expands the traditional

accounting framework of financial performance to include two
additional dimensions: social and environmental. The three
"bottom lines" represent the economic, social, and
environmental aspects of an organization's activities. The TBL
framework aims to measure and evaluate a company's success
and impact not only in terms of financial profits but also in
terms of its contributions to social well-being and environmental
sustainability.

*Case study: It’s nearly 30 years since John Elkington fi

rst posed the concept of the “triple bottom line” (TB
L) in his milestone book Cannibals with Forks. Moving b
eyond shareholder and financial value alone, Elkington
postulated that success in this century would be deter
mined by companies that look at three bottom lines – t
he economic, the ecological, and the social. In short, he
was de facto signaling the end of the Friedman era that
focused purely on financial shareholder value and not s
takeholder implications.
Almost a quarter of the way into the century, the results
for the TBL are decidedly mixed – as determined by the
creator himself, who called for a rethink of the concept
five years ago because he felt it had been reduced to an
accounting tool rather than a genuine lever for change.
While the concept has given rise to a variety of reportin
g methods (SROI, integrated reporting, and ESG, to na
me a few), the plethora of standards and measurement
s has created enough “wiggle room” for inaction fro
m companies. The adoption of the concept has been po
sitive, but the consultant-led corporate interpretation,
adoption, and realization of it have not always been so.
Reporting standards can be adhered to strictly and com
panies can thereby get a green/clean chit, but that is no
t necessarily a true reflection of the impact of their activ
ities. This is why some fossil fuel companies get a better
environmental rating than the world’s largest EV man
ufacturer.

At face value, it may seem that the concept is riddled wi

th problems or has had its time. But I would argue that i
t is just getting started. The idea of this being a seismic
shift in the way companies conduct their business, inco
rporate the stakeholder universe into their orbit, and ev
aluate their performance has clearly been ignited. The c
alling out of companies for their lack of environmental r
esponsibility or exposing human rights issues in their su
pply chains as well as holding directors responsible for
governance issues are a direct product of this orientatio
n. Major stock markets and shareholders demand the a
bove transparency and reporting, and consumers activ
ely seek this information and reward or punish a compa
ny’s brands accordingly.

In effect, business as a whole has moved up on the resp

onsibility spectrum to create a new normal and this, in t
urn, has led to the concept of corporate purpose being r
eimagined. For many years, and even to this day, defini
ng purpose for some companies has been about simply
articulating its vision and bringing it together with the s
kills and passion of the workforce –what the firm is goo
d at, its economic output, and the need it has fulfilled.

(imd.org)

CHAPTER 4
1.Citizens United: is shorthand for a landmark 2010 Supreme
Court case – Citizens United v. FEC – that changed the face of
campaign finance and money in politics in the United States.

Citizens United overturned certain long-standing restrictions on

political fundraising and spending – transforming the entire
political landscape of the country.

Most notably, Citizens United granted corporations, nonprofits,

and unions unlimited political spending power.

*Case study: The “Citizens United” decision and why it

matters
The Citizens United ruling, released in January 2010, tossed out
the corporate and union ban on making independent
expenditures and financing electioneering communications. It
gave corporations and unions the green light to spend unlimited
sums on ads and other political tools, calling for the election or
defeat of individual candidates.

In a nutshell, the high court’s 5-4 decision said that it is OK for

corporations and labor unions to spend as much as they want to
convince people to vote for or against a candidate.

The decision did not affect contributions. It is still illegal for

companies and labor unions to give money directly to
candidates for federal office. The court said that because these
funds were not being spent in coordination with a campaign,
they “do not give rise to corruption or the appearance of
corruption.”

So if the decision was about spending, why has so much been

written about contributions? Like seven and eight-figure
donations from people like casino magnate and billionaire
Sheldon Adelson who, with his family, has given about $40
million to so-called “super PACs,” formed in the wake of the
decision?
For that, we need to look at another court case —
SpeechNow.org v. FEC. The lower-court case used the Citizens
United case as precedent when it said that limits on
contributions to groups that make independent expenditures are
unconstitutional.

And that’s what led to the creation of the super PACs, which act
as shadow political parties. They accept unlimited donations
from billionaires, corporations and unions and use it to buy
advertising, most of it negative.

The Supreme Court kept limits on disclosure in place, and super

PACs are required to report regularly on who their donors are.
The same can’t be said for “social welfare” groups and some
other nonprofits, like business leagues.

These groups can function the same way as super PACs, so long
as election activity is not their primary activity. But unlike the
super PACs, nonprofits do not report who funds them. That’s
disturbing to those who favor transparency in elections. An
attempt by Congress to pass a law requiring disclosure was
blocked by Republican lawmakers.

The Citizens United decision was surprising given the

sensitivity regarding corporate and union money being used to
influence a federal election. Congress first banned corporations
from funding federal campaigns in 1907 with the Tillman Act.
In 1947, the Taft-Hartley Act extended the ban to labor unions.
But the laws were weak and tough to enforce.

It wasn’t until 1971 that Congress got serious and passed the
Federal Election Campaign Act, which required the full
reporting of campaign contributions and expenditures. It limited
spending on media advertisements. But that portion of the law
was ruled unconstitutional — and that actually opened the door
for the Citizens United decision.
Spending is speech, and is therefore protected by the
Constitution — even if the speaker is a corporation.

So far in the 2011-2012 election cycle, super PACs have spent

$378 million, while non-disclosing nonprofits have spent $171
million, at times praising, but mostly badmouthing candidates,
according to figures compiled by the Center for Responsive
Politics.
(publicintegrity.org)

2.Carbon tax: A carbon tax is a fee imposed on the burning of

carbon-based fuels (coal, oil, gas). More to the point: a carbon
tax is the core policy for reducing and eventually eliminating the
use of fossil fuels whose combustion is destabilizing and
destroying our climate.

A carbon tax is a way — the only way, really — to have users of

carbon fuels pay for the climate damage caused by releasing
carbon dioxide into the atmosphere. If set high enough, it
becomes a powerful monetary disincentive that motivates
switches to clean energy across the economy, simply by making
it more economically rewarding to move to non-carbon fuels
and energy efficiency.

*Case study: Singapore’s carbon tax

Singapore’s carbon tax underpins our net zero targets and
climate mitigation efforts by providing an effective economic
signal to steer producers and consumers away from carbon-
intensive goods and services, hold businesses accountable for
their emissions, and enhance the business case for the
development of low-carbon solutions. In all, the carbon tax
currently covers 80% of our total greenhouse gas (GHG)
emissions from about 50 facilities in the manufacturing, power,
waste, and water sectors. The carbon tax forms part of
Singapore’s comprehensive suite of mitigation measures to
support the transition to a low-carbon economy.
Carbon Tax in Singapore from 2019 to 2023

Singapore implemented a carbon tax, the first carbon pricing

scheme in Southeast Asia, on 1 January 2019. The carbon tax
level was set at S$5/tCO2e for the first five years from 2019 to
2023 to provide a transitional period for emitters to adjust.

Singapore’s Carbon Tax Post-2023 (Effective from 1 January

2024) .To support our net zero target, the carbon tax will be
raised to S$25/tCO2e in 2024 and 2025, and S$45/tCO2e in
2026 and 2027, with a view to reaching S$50-80/tCO2e by
2030. This will strengthen the price signal and impetus for
businesses and individuals to reduce their carbon footprint in
line with national climate goals.

The revised carbon tax trajectory is critical in enabling the pace

of transformation needed to achieve our raised climate ambition
and make the economy- and society-wide transition to a low-
carbon future. It also helps businesses remain competitive in a
low-carbon future, by enhancing the business case to invest in
low-carbon solutions, and ensuring that new investments and
economic activities are aligned with our national climate goals.

The Government does not expect to derive additional revenue

from the carbon tax increase in this decade. The revenue will be
used to support decarbonisation efforts and the transition to a
green economy, and cushion the impact on businesses and
households.
(nccs.gov.sg)

CHAPTER 6
1.Sexual harassment: is any unwanted comment, gesture, or
action that is sexual in nature (aside from unwanted touching of
sexual body parts, which is sexual assault), that makes someone
feel afraid, embarrassed, uncomfortable or ashamed. The
intention of the person doing the action doesn’t matter, it’s the
negative impact the action has that makes something sexual
harassment.

*Case study:
The Complainant ‘Hill’ commenced working for the
Respondent as a paralegal in May 2015. The Respondent was a
solicitor at a boutique law firm in New South Wales.

Within two months of commencing employment, in July 2015,

the Respondent began sexually harassing the Complainant,
sending her incessant emails ‘professing his love for her and
proposing a romantic relationship’, which she openly rejected.

The Respondent further exploited the power imbalance between

himself and the Complainant, as he was the principal of the
legal practice, while the Complainant was a paralegal, new to
the role, and relied on her employment to care for her two
children.

In July 2015, the sexual harassment escalated. On a work trip to

Sydney, the Respondent and Complainant stayed at the house of
the Respondent’s brother. Whilst the Complainant had left her
bedroom, the Respondent entered her room and lay on her
mattress in only his underwear, waiting for her to return. When
the Complainant returned, she repeatedly asked him to leave,
which he only agreed to do if she gave him a hug. The following
morning, the Respondent was waiting in the complainant’s
bedroom when she came out of the shower, and he was dressed
only in a towel.

After the work trip, the ‘emails and invitations continued

unabated’, and there were additional physical incidents. For
example, on several occasions the Respondent prevented the
Complainant from leaving her office until she gave him a hug.

In October 2015, the Complainant again confronted the

Respondent directly and asked him to stop harassing her.
However, the Respondent refused her request and continued to
send her emails. On 12 October 2015, he sent the Complainant
seven consecutive emails without a reply, expressing in one
email that her work performance was not good enough because
she was not sleeping with him, and in another he wrote in the
subject line ‘EXPRESSING MY FEELINGS IS NOT
HARASSMENT’.

The Complainant filed a complaint with the Australian Human

Rights Commission on 9 November 2016, which was
unresolved at conciliation. The Complainant then commenced
proceedings in the Federal Circuit Court, in which she gave
evidence at trial about how the sexual harassment had
‘psychologically traumatised’ her.

The trial judge found in favour of the Complainant and that

sexual harassment had occurred, ordering the Respondent to pay
the Complainant $120,000 in general damages and $50,000 in
aggravated damages. The Respondent appealed the decision in
the Federal Court Full Court, though it was dismissed by
Collier, Reeves and Perram JJ.
(sexualharassmentaustralia.com.au)

2. Comparable worth: Comparable worth is defined as the

idea that female and male employees who perform work deemed
to have the same value should receive similar monetary
compensation. The overall value of a job can be compared by
studying jobs that contain different tasks. What this doctrine
ultimately means is that a woman who performs a job that has
the same worth as a man performing that job should be paid the
same wage as a man. There are situations where two employees
of opposite genders performing the same job might not receive
the same pay, such as when one of them is in a more senior
position.

* Case study: EEOC Rejects Comparable Worth Cases

The Equal Employment Opportunity Commission ruled

yesterday that it will not act on behalf of women who allege
discrimination in pay on the basis of "comparable worth."

The Reagan administration has shown little sympathy for

"comparable worth" -- the idea that low-paying, traditionally
female jobs should be upgraded to the salary level of jobs of
comparable skill, responsibility and difficulty that are
predominantly held by men. The EEOC's decision officially
closes a major avenue of federal redress, although several states
are acting on their own.

"We are convinced that Congress never authorized the

government to take on wholesale restructuring of wages that
were set by non-sex-based decisions of employers -- by
collective bargaining -- or by the marketplace," said EEOC
Chairman Clarence Thomas.

The concept of comparable worth is not recognized under Title

VII of the Civil Rights Act of 1964, which outlaws
discrimination in pay on the basis of gender, Thomas said.

"We found that sole reliance on a comparison of the intrinsic

value of dissimilar jobs -- which command different wages in
the market -- does not provide a violation of Title VII," he said.

The EEOC had a backlog of about 266 cases based on

comparable worth before yesterday's decision. Women involved
in the cases and others seeking to bring pay-discrimination suits
based on comparable worth will now have to seek redress
through the courts.
The U.S. Chamber of Commerce hailed the decision as "a
positive step toward reason, logic and fairness in the face of an
extremely controversial and emotional debate."

Gerald W. McEntee, president of the American Federation of

State, County and Municipal Employees, said: "The
commission's actions are just the most recent by the
administration seeking to choke off the nationwide movement
toward remedying sex-based wage discrimination for millions of
working women . . . ."

John J. Sweeney, president of Service Employees International

Union, said: "This decision will force us to the courts to achieve
fair wages for women and minority workers in this country . . . .
The actions of the EEOC and this administration have stalled the
efforts of working women to achieve nondiscriminatory wages."

The EEOC's decision came in a case brought by female

employes of a municipal housing agency, reportedly in
Rockford, Ill. The women charged that the housing agency
wrongly paid its predominantly female administrative staff less
than its mostly male janitorial staff.

The EEOC found that, although there were differences in pay

between the jobs, there is no evidence that the difference was
due to gender or that the housing authority "steered women
away from maintenance positions or otherwise limited women's
access to those jobs."

In its decision, the EEOC also said the women had not proved
that they were doing jobs "similar in skill, effort, responsiblity
and working conditions" -- or the same jobs -- which would
have opened the way for the EEOC to act under the Equal Pay
Act requiring equal pay for equal work.
The commission cited several court cases as precedents for its
decision not to recognize comparable worth as a basis for acting
on behalf of people alleging job discrimination.

About a half-dozen states, under pressure from female employes

and from unions, have adopted comparable worth plans intended
to raise the wages of many female employes. In addition, two
dozen other states have completed studies on comparable worth.

Los Angeles last month approved a $12 million contract raising

the salaries of low-paying, traditionally female jobs to the pay
level of "comparable" male-dominated positions.

The EEOC's decision is in line with an April ruling by the U.S.

Civil Rights Commission rejecting the idea of comparable
worth. The commission urged Congress and other federal
agencies to do the same.

The Civil Rights Commission said that although women, on

average, earn about 40 percent less than men, the difference is
attributable to merit, seniority, collective bargaining, "the role
women play in the family generally which affects their choices,
jobs, career expectations" and the fact that women do more part-
time work than men.
(washingtonpost.com)

CHAPTER 7
1.Trade serect: is any practice or process of a company that is
generally not known outside of the company. Information
considered a trade secret gives the company a competitive
advantage over its competitors and is often a product of internal
research and development.

To be legally considered a trade secret in the United States, a

company must make a reasonable effort in concealing the
information from the public; the secret must intrinsically have
economic value, and the trade secret must contain information.
Trade secrets are a part of a company's intellectual property.
Unlike a patent, a trade secret is not publicly known. Trade
secrets may take a variety of forms, such as a proprietary
process, instrument, pattern, design, formula, recipe, method, or
practice that is not evident to others and may be used as a
means to create an enterprise that offers an advantage over
competitors or provides value to customers.

*Case study: Secret formula of the original Coca-Cola

There are some variations of how the story of the formula goes
but the company has its own version of it. The drink’s original
inventor John Pemberton created the drink in 1886 and had
shared the recipe with only a couple of people before his death
in 1888. Coke’s original founder Asa Candler purchased the
rights in 1891 and made a few changes to it. The recipe,
however, would not be written down until 1919. It had
originally just been passed down by word of mouth. Then, in
1919, a group of investors led by Ernest Woodruff took out a
loan to purchase the company and he needed collateral for the
loan. Coke gave him a written version of the formula to use as
such. From that time on, the document was guarded in an
Atlanta bank for many years. Eventually, Coke decided to create
a marketing strategy centered around its secret formula, hoping
the shroud of mystery around the formula would generate
attention to their products. Coke further added to this
mysteriousness by building an entire vault in 1995 within the
World of Coca-Cola, the company’s museum in Atlanta. Coke
also claims that only two senior executives within the company
know the formula at a time and they can never travel together.

The vault itself is of an intricate design coupled with high-tech

security features. It is only accessible via a palm scanner, a
numerical code pad and a huge steel door. Once inside, there’s
another safe box with more security features. And inside that
safe box is a metal case containing the written recipe. The
company even completed the vault with red lighting and fake
smoke.
Now, it’s important to take all of this with a grain of salt as this
information is based on Coke’s own claims. Some have called
into question whether it is only really two senior executives at a
time that know the formula. They have also questioned whether
the formula was not written until 1919. Ultimately, this all
comes from an elaborate marketing campaign manufactured by
Coke Regardless of the truthfulness of the claims or lack
thereof, the company makes serious efforts to keep the formula
secret. In doing so, Coke has created a form of IP called a trade
secret. A trade secret has three components to it. First, a trade
secret contains information that has either actual or potential
independent economic value by virtue of not being generally
known. In this case, “economic value” is how the secrecy of
Coke’s formula keeps competitors from copying it. Second, a
trade secret has value to others who cannot legitimately obtain
the information. Lastly, a trade secret is subject to reasonable
efforts to maintain its secrecy. As long as Coke can keep the
formula reasonably secret, then the trade secret protection can
last forever. The information does not have to be entirely secret,
meaning that more people beyond just two senior executives at
Coke can know the formula. Ultimately, the trade secret
protection depends on the effectiveness of the processes Coke is
using to keep its formula secret. How exactly can Coke protect
its trade secret? Well, as previously mentioned, it can and must
use reasonable efforts to maintain the secrecy of the formula.
But what if the information becomes generally known? If the
information had been legitimately obtained, then the trade secret
is essentially “cancelled” and the information cannot be
protected anymore as a trade secret. An example is if someone
were to experiment on a Coke can and independently discover
the formula.
Now, if someone were to improperly obtain the information,
that would be what is called misappropriation of a trade secret.
Such examples of improperly obtaining information include
breaches of nondisclosure agreements, industrial espionage,
theft, fraud, and bribery. The trade secret owner has a right to
sue another party for misappropriation and can ask for money
damages, equitable relief such as an injunction stopping
disclosure of the trade secret, and costs for litigating the claim.
However, the information can still lose its trade secret status if
the information becomes generally known even though it was
illegally obtained.Thus, it is incredibly important that Coke uses
its best efforts to guard the secrecy of its recipe. Even if the
story about the two senior executives is not exactly true, Coke
still uses other processes to limit the dissemination of the
formula in order to keep the trade secret status on its formula. It
would still have to keep the amount of people who know the
true formula to a minimum and likely have the employees who
do learn about the formula to sign non-disclosure agreements.
Ultimately, Coke won’t divulge how exactly it keeps the
formula secret. But considering Coke has successfully kept the
formula secret for decades, it is safe to say that the methods they
are using are working.
(blogs.luc.edu)

2.Insider trading: also known as insider dealing, is the

malpractice of selling or buying securities such as equity and
bonds by the insiders of a company, which includes the
employees, directors, executives and promoters.
To prevent such acts and to promote fair trading in the market
for the interest of common investors, the stock market regulator
Sebi (the Securities and Exchange Board of India) has
prohibited the firms to purchase their own shares from the
secondary market. Insider trading is one of the most serious
malpractices that exists in the market.
Insider trading basically refers to the buying, selling or trading
of shares or other securities (such as bonds or stock options) of
a listed company using unpublished price-sensitive information
(UPSI) that can affect the stock price that has not been
disclosed yet.

*Case study: Former Amazon Financial Analyst Pleads

Guilty to Insider Trading
A former financial analyst at Amazon.com, Inc., pleaded guilty
today in U.S. District Court in Seattle to securities fraud
involving insider trading, announced U.S. Attorney Annette L.
Hayes. BRETT D. KENNEDY, 26, currently of Blaine,
Washington, admitted that in April 2015, he provided non-
public quarterly financial results to a friend who then purchased
Amazon stock and sold it at a profit once the results were made
public. The friend paid KENNEDY for this inside information.
KENNEDY is no longer employed by Amazon. Chief U.S.
District Judge Ricardo Martinez scheduled sentencing for
December 8, 2017.
“Insider trading of any kind corrodes trust in one of the crown
jewels of our country -- our financial markets,” said U. S.
Attorney Annette L. Hayes. “As this case demonstrates, we
work closely with our law enforcement partners – including the
FBI and the SEC – to investigate and hold accountable those
involved in this serious crime.”
According to the information filed in the case, KENNEDY
began work as a financial analyst at Amazon in 2013. As part of
his employment he signed a confidentiality statement that he
would not disclose Amazon’s non-public financial information
outside the company. The policy specifically mentions
information such as earnings and losses as material confidential
information. In April 2015, KENNEDY used his access to view
and write down Amazon first quarter earnings that were going to
be announced later in the month. KENNEDY provided this
information to his friend. After viewing the information, the
friend purchased 4400 shares of Amazon stock for $1.7 million.
When the positive earnings news was announced publicly, and
the stock price rose, the friend sold the shares for a gain of
nearly $116,000.
The friend paid KENNEDY $10,000 in cash for the
information.
As part of the plea agreement, the government will recommend
KENNEDY serve no more than a year and a day in prison.
However, the judge is not bound by that recommendation and
KENNEDY could be sentenced to the maximum penalty of up
to 20 years in prison and $5 million fine.
The Securities and Exchange Commission today filed civil
charges against KENNEDY. In its complaint it identifies the
friend as Maziar Rezakhani, and names him as a defendant.
Rezakhani, 28, is currently serving a five year prison term for
defrauding a bank, Apple, Inc., and various shipping and
insurance companies. The insider trading investigation grew out
of the investigation into Rezakhani’s frauds. The SEC is seeking
disgorgement of all profits from Rezakhani’s alleged illegal
trading. KENNEDY agreed to a settlement with the SEC.
Details of the SEC action are available here.
The case was investigated by the FBI. The case was prosecuted
by Assistant United States Attorney Brian Werner.

(justice.gov)