Jack and Jill Come Tumbling Down

Jack, a recent business school graduate, is thrilled to land a job as a fund manager for PureProfit, a successful socially responsible investment firm. PureProfit is committed to the triple bottom line and aggressively markets its mission to invest in companies that produce goods and services that improve the quality of life for all mankind. PureProfit’s Fund Prospectus describes how fund managers apply negative screens to companies that may derive profits from liquor, alcohol, gambling, or defense contracts and also claims the firm regularly reviews holdings to ensure compliance with its own screening policy.

Quickly Jack becomes enamored with his job, the company, and its triple bottom line mission, though his co-workers often poke fun at him for being an “Eagle Scout”. Nonetheless, it is a place where Jack feels he can apply his talents in the investment world, stay true to his core values, and build a comfortable future for himself and his family. In just a few years, Jack steadily builds his clients’ portfolios while building his own nest egg. He and his wife Jill have built a “green” home that is the envy of their neighbors, she has left her well-compensated position in a law firm to care for their two- year-old, and they are planning to hike in the Himalayas. Life is good.

One Friday night, some of the firm’s old hands invite Jack for drinks at the local watering hole and he is flattered that they have included him in their clique. After a few drinks, to Jack’s dismay, one of his flashier colleagues, Pete, boasts that his clients’ portfolios are growing at a faster rate than the firm’s average, and adds, with a wink and a nod, “you know Jack, if you really want to get ahead in this business, you can’t be so squeaky clean. Take it from me, those negative screens are easy to ignore, and no one is watching.”

Happy to be accepted by his colleagues, but troubled by Pete’s unguarded comments, at first Jack attributes Pete’s remarks to having had a few too many. After a little investigating, to his chagrin, Jack discovers that Pete’s comments were not bravado. In fact, several PureProfit fund managers have been investing in companies that have stakes in tobacco, alcohol, gambling, and defense contracts over a period spanning several years. He confides in Jill, who urges Jack to report Pete and his cronies. Jack is not only concerned about Pete, but also he is worried that Mr. Pure, the President, and Mr. Profit, the Vice President, of PureProfit may be complicit in this deception as well. Jack and Jill are losing sleep wondering whether this is a legal issue (Jill says yes) or an ethical issue (so says Jack). Jack also worries that he might lose his job if he reports his discovery to the higher ups. Then — he fears — Jack, Jill, and all they have worked for will come tumbling down.

  1. Is Pete’s disregard of stated company investment policies illegal as well as unethical?
  2. Does Jack have an ethical obligation to report Pete and his cronies for their ethical lapses to Mr. Pure and Mr. Profit, at the risk of losing his job?
  3. If Jill is correct, should Jack report his discovery to the Securities and Exchange Commission?
  4. What would you do if you were in Jack’s shoes?

Submitted by Susan Calegari

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3 Responses to Jack and Jill Come Tumbling Down

  1. John M says:

    Nice and tough Sue…

    Is it unethical? Yes! It goes against the Companies mission and apparent core values. With that I’m not a banking law expert (nor do I want to be) but I can easily see what is called “Theft by deception” as a NH charge where a consumer is promised something and deceived into something else.

    As far as the bosses go I would say yes, absolutely. For Two reasons, the first is you need to stay true to yourself. The second is they may or may not know and they may or may not want to know but you won’t find out unless you tell them. They may be more mad at you for harboring the information and they had to find out through a lawsuit or arrest that the corruption had occurred. Won’t they be mad you then that you didn’t tell them sooner! I’m sure Jack could think of a tactful way to pose the question or release the information. Leading to #3.

    Watch their response…do they become offended, defensive, chuckle at the big joke that Jack finally caught on to? If it is the latter I would suggest he report his discovery to Securities and Exchange. Who knows what is will do to his career but there is only one person staring back at him in the mirror everyday and he’s the one that has to live with his decisions.

    If I were Jack I would absolutely report my findings to the Bosses…tactfully…and very carefully watch the response. If it was obvious that they were in my camp, good for me! If it was obvious they were not then time to go to a higher authority, and find a new job. Who wants to work for liars anyways. Then I would apply to Antioch Grad School and respond to Ethical Postings.

  2. John M says:

    Nice and tough Sue…

    Is it unethical? Yes! It goes against the Companies mission and apparent core values. With that I’m not a banking law expert (nor do I want to be) but I can easily see what is called “Theft by deception” as a NH charge where a consumer is promised something and deceived into something else.

    As far as the bosses go I would say yes, absolutely. For Two reasons, the first is you need to stay true to yourself. The second is they may or may not know and they may or may not want to know but you won’t find out unless you tell them. They may be more mad at you for harboring the information and they had to find out through a lawsuit or arrest that the corruption had occurred. Won’t they be mad you then that you didn’t tell them sooner! I’m sure Jack could think of a tactful way to pose the question or release the information. Leading to #3.

    Watch their response…do they become offended, defensive, chuckle at the big joke that Jack finally caught on to? If it is the latter I would suggest he report his discovery to Securities and Exchange. Who knows what this will do to his career but there is only one person staring back at him in the mirror everyday and he’s the one that has to live with his decisions.

    If I were Jack I would absolutely report my findings to the Bosses…tactfully…and very carefully watch the response. If it was obvious that they were in my camp, good for me! If it was obvious they were not then time to go to a higher authority, and find a new job. Who wants to work for liars anyways. Then I would apply to Antioch Grad School and respond to Ethical Postings.

  3. greenmba2008 says:

    There is absolutely no way for Jack to ignore this. He must immediately go to his boss. There is no justification for this kind of lying. Why are people investing with this firm? Is it to make the quick buck, or because they want to do something positive with their investment money?

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