Bernard Madoff Case
Applying the 9-step Process of Value-Aligned Leadership to Madoff’s Case
Bernie Madoff’s case raises ethical issues in handling investors’ money, from how he ran the company to the mode of operation in which he guaranteed above-average returns to investors. There was an obvious conflict of interest and fraudulent transactions meant to hoodwink the naïve public into believing that Madoff was making the billions he claimed to be pushing for the investors. Red flags were raised in the numerous complaints raised by the people on the conduct of Madoff, but the SEC failed to act diligently on them, leaving the people exposed to Madoff’s fraMadoff’shree decades (Stanwick & Stanwick, 2016, p. 279). The nine-step process outlined in the values-aligned leadership model will be used in Madoff’s case. Madoff’snclusion on using the same in a global organization will be made based on assessing its applicability to the case study.
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At the core of running the brokerage and securities firm, Madoff ought to have envisioned the purpose of the business. Here, the management of any company has a fiduciary duty towards its investors and should always strive to earn profits for the investors (King, 2003). Howfirm’sBernie falsified his firm’s operations and operated in secrecy without considering how this impacted creating an impression of a successful business. Ultimately, without an explicit purpose for the company, Madoff could attract unsuspecting customers who invested billions of dollars in his fraudulent company. His business model, where he rejected some investors and recruited high-end clientele, made his company look legitimate and attracted investors investors’ attention, but this was all a lie. Had he been open with the business model and explained to investors how their money was invested in guaranteeing the stated returns, most would have realized it was a Ponzi scheme destined to fail (Shafritz et al., 2016). A constant and consistent assurance of the investors of the purpose and business model adopted is a must to win the investors’ confidence.
Coupled with the organizatorganization’sarticulated in the firm’s mifirm’sstatement are the core values that the organization operates in. In the case of Madoff, there was a lack of accountability, openness, and integrity in how the business was run. As Madoff put it, the organization’organization’sncies were all riddled with secrecy as investors’ moinvestors’t invested. A red flag for the investors should have been the magnitude of cases brought before the SEC challenging the model of business run by Madoff, including Markopoulos’ Markopoulos’ to the SEC detailing all areas that pointed to fraudulent dealing by Madoff (Shafritz et al., 2016).
In identifying the complete list of stakeholders, the management must understand its role towards its employees, investors, regulators, and all involved in realizing the firm’s objectives (King, 2003). firms was an influential Wall Street business person, which made him get away with SEC’s scrutiny. As such, his duty to run an ethical business under the regulator’s watch was impossible; the regulator’s subsequent role of prioritizing the stakeholders. As a manager, the ultimate task is the fiduciary responsibility towards the investors, which Madoff failed to uphold. Fraudulently manipulating trading records to create an impression of a successful business is a defeatist endeavor that must be discouraged by any manager.
Having identified that the business model adopted by Madoff was deemed to fail, there was the need to come up with alternative decision-making and course of action to salvage the situation. Any leader in the position of Madoff requires business understanding to know the best alternatives to save investors money and prevent the problem from spiraling into what became of Madoff.
After determining the need to employ an alternative course of action in running the business, Madoff should have resorted to professionalism in managing the investors’ funds. This would mean he had to restructure the t investors of the securities and brokerage firm. To replace his close family members involved in the daily running of the firm with professionals who knew how to invest the money collected from investors and earn profits rather than continue running a fraudulent business. Any ethical dilemmas in realizing the stakeholders’ duties must be addressed internally as instancesstakeholders’of duties (King, 2003).
Lastly, in keeping with running an open and ethical business, full disclosure to the stakeholders about the business’s operations is required. This was lacking in Madoff’s case, as the trading records were manipulated to suit the need to maintain a posiMadoff’slic image. In running such a business with billions of dollars at stake for investors, compliance with the regulatory standards on financial records and business model disclosure must adhere to protect the investors.
In light of what was at stake in Madoff’s case, all global organizations must adopt value-aligned leadership in managing investors Madoff. More so, compliance with the set laws in the business is necessary, as failureinvestors’trimental to the investors. Had Madoff run a transparent company and complied with SEC’s requirements, the loss of funds by the investors would not have occurred. Business managers must SEC’ste ethically to avoid legal and financial repercussions for fraudulent operations.
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King, C. E. (2003). Toward a better model for values-aligned leadership. Colorado Christian University.
Shafritz, J. M., Russell, E. W., & Borick, C. P. (2016). Chapter 9 strategic management and government regulation. In J. M. Shafritz, E. W. Russell, & C. P. Borick, Introducing Public Administration (pp. 325-355). New York: Routledge.
Stanwick, A. P., & Stanwick, D. S. (2016). Understanding business ethics (3rd ed.). Thousand Oaks, CA: SAGE Publishing.
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Session 4 Values Aligned Leadership Case AnalysWe’llernard Madoff Case
Reading and Viewing Assignments
Please complete the following before this session:
Stanwick, P., & Stanwick, S. (2016). It understands business ethics (3rd ed.).
- Chapters 1: The Foundation of Ethical Thought (pp.15-18)
- Chapter 12: Establishing a Code of Ethics and Ethical Guidelines
- Chapter 13: Evaluating Corporate Ethics
Sire, J. W. (2009). The universe next door: A basic worldview catalog (5th ed.).
- Chapter 7: Journey to the East
- Chapter 8: The Vanished Horizon
After reviewing the white paper entitled, Toward a Better Model for Values-Aligned Leadership (pdf)
- select one of the following cases from Stanwick and Stanwick (2016):
- Case 1: Bernard Madoff – How “One Big Lie” Can Destroy Thousands of Lives (p. 278-285)
- Case 9: HealthSouth: The Rise and “all of the “Crushy Empire (pp. 345-351)
- Case 21: Tyco: I’m sure that is a nice shower curtain (pp. 442-455)
- Then practically implement the nine-steI’mrocess from the Values Aligned Leadership model. How would you have applied the VALs process to the case you selected? Conclude with an overall assessment of the value of using the Values Aligned Leaderships (VALs) model in global organizations.
Prepare a three-page response paper (five pages total, including cover page and reference page) that applies an interdisciplinary and multidimensional approach to ethical and analytical problem solving and demonstrates valid and reliable research-based methods for using leadership theory to practice within the context of ethical theory and biblical worldview. Develop your paper based on the reading assignments, discussion forum, and session assignments, integrating biblical principles with outside research-based resources to support your presuppositions. A good report should include at least three sources besides the course texts and be formatted according to APA requirements.
In this and all other papers in this class, you should develop an outline and working draft of several pages, then boil your thoughts down to three pages plus a cover page and references (5 pages total). Doing so can provide a concise and organized response containing the most salient points and logical reasoning. You must conclude. Suggestions for how to do this are in the Example Outline (pdf)
Click on the Session 4 Values Aligned Leadership Case Analysis link to submit your assignment by the posted due date. Review the rubric available in Due Dates and Grades for specific grading criteria.