“Bitran’s misdeeds were made public as early as 2009, yet he stayed on Sloan’s faculty until 2013.”

That’s what I’m talkin’ about.

Sloan’s decision to keep Bitran for years after [a 2009 news story about his Madoff connection], and eight months after he agreed to pay the SEC some $4.8 million, suggests the school did not think the transgressions warranted stronger action against him.

Yeah. Well. What can MIT say? If it were honest it would say Man if we bumped every b-school boy doing a doo-doo on the SEC, we’d have to declare bankruptcy…

‘“MIT does not comment on pending criminal proceedings involving members of the MIT community,” Paul Denning, [an MIT spokesperson] said in an e-mail.’

And why, you might ask, not? Here’s one of your deans, a man who taught at your business school for decades, and you have nothing to say?

The former deputy dean of MIT’s business school and his son agreed to plead guilty Tuesday to operating a $500 million hedge fund scam.

Gabriel Bitran, 69, who taught at MIT for 35 years and served as deputy dean at the Sloan School of Business for five, allegedly lied to clients about the return on investments his hedge fund GMB Capital Partners was delivering.

He’ll probably go to prison for five years. He kissed the ass of Bernard Madoff (that’s how the SEC discovered his scam). He lied and tried to hide funds when the SEC started being interested. He skimmed millions off of his scammed money for himself.

He’s a dumbfuck too, having admitted in a series of emails to his son/partner in crime exactly what he was doing every step of the way.

This guy did incalculable damage to many people, and one of our highest-profile, most-esteemed universities harbored and esteemed him for over a generation. Gave him cover. Gave him respectability.

But eh we don’t wanna say nothing, man… It’s … pending! We don’t do pending…

But they were found guilty. What’s pending? You’re waiting a decent interval to see how many years he gets?

Way back in 2012 – when Bitran was barred from the securities industry and had to pay a massive fine to the SEC – MIT did the same thing: “It has nothing to do with the school.”

UD gets that universities dread being tainted by the crooks they hire and promote. But with something this high-profile, you simply have to acknowledge it and regret it and all of that. Otherwise you leave people wondering why your school retained a highly praised and highly compensated Ponzi schemer in its school of business.

Take a look at Yeshiva University – look at how well it’s doing with alumni giving and credit ratings and all of that in the wake of its decision to pretend that Bernard Madoff and Ezra Merkin had nothing to do with the school.

Update on the Ultimate University Simulacrum.

[My high-powered panel on business ethics] discussed at great length how an ethical culture had to come from the top, how ethics had, according to some panelists, grown rapidly in importance in business. And, indeed, how the most ethical companies are the most profitable.

But as we lurch from one corporate scandal to the next, surely it’s clear that, while big companies are creating more and more glossy brochures on corporate responsibility, the temptation to cut corners skews behaviour as much as it ever did. From alleged corruption in China by GSK and Rio Tinto to BP’s rig and refinery disasters, to the price fixing, sanctions busting, mis-selling and foolish lending of bonus-fuelled bankers, it seems all that changes is the scale of the wrongdoing.

What was most telling was how both academics [on the panel] admitted the lowly status the subject of ethics held within the MBA courses teaching the next generation of big business leaders. One confessed his pupils were rarely interested in the subject and that it barely merited a mention on the syllabus; the other told of how the great Lord Kalms – founder of Dixons – had bequeathed a large sum to the London Business School for a chair of business ethics at London Business School. Where is that position now? Sadly, quietly dropped.

More glossy brochures, more glossy courses. Looking good.

“A member of the Finance faculty said openly: ‘If we teach a course in business ethics, then it will only show that what I am teaching is unethical.’”

Honesty is such a lonely word!
Everyone is so untrue!

But not this guy, this Harvard finance professor who honestly complained to Amitai Etzioni that if Etzioni was going to be so … unseemly as to teach business ethics at Harvard, this guy would be outed as teaching his students to be greedy amoral sons of bitches…

Oh but no! Don’t put yourself down! Business schools aren’t teaching people to be amoral and greedy! In fact, business schools graduate people just like you and me. God knows where the excesses in the business world come from:

Thomas Donaldson …thinks that “the ‘greed’ explanation for Wall Street excesses” is “unhelpful.” He says, “I want to believe it too, but no serious study has shown that greed is higher on Wall Street than in other industries, or for that matter higher in any one industry than in another, or in any time period than in another. Greed no doubt varies by time and place, but it is notoriously hard to measure and is a persistent feature of the human condition.”

So complex, so persistent a feature of the human condition … forget it! If it’s ever occurred to anyone to wonder whether insisting on a sixty-seven million dollar bonus for a year spent undermining Americans’ faith in capital markets is greedy, forget it! Point One, every single one of us, under the same circumstances, would do it, because we’re all exactly like Mr Everyman Blankfein. Point Two, whether our industry is hedge fund or Red Cross, no serious study shows that any of our pursuits is less about the personal accumulation of huge amounts of money than any other.

In a way, it’s kind of wonderful. Under our differences, we’re all the same. We’re all greedy amoral sons of bitches.

So you can’t accuse b-schools of teaching greed, because it can’t be taught. Greed is Us. Indeed we should thank b-schools for saving civilization, because they’re teaching people to sublimate and channel their greed. Instead of killing their relatives for their life insurance money, Goldman Sachs employees have learned how to drive a “highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.”

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UD thanks Daniel.

“In his bid for leniency, Martoma mentions his 1999 expulsion from Harvard Law School for faking a transcript of his grades, arguing that he has been ‘punished enough’ by having the episode publicized at his trial.”

Oh honey. Why not tell the judge the whole story of your grade faking? If the judge knows everything, leniency will be that much more lenient. So let’s see. Here are the details:

In late 1998, [Mathew] Martoma, a graduate of Duke, altered the transcript of his first-year law school grades: He gave himself A’s in Civil Procedure, Contracts, and Criminal Law, rather than the B, B+, and B he’d earned, according to a Harvard Administrative Board report. He applied for clerkships with 23 judges using the altered transcripts. Weeks later, someone in the school’s registrar’s office discovered that the transcript had been changed. Martoma then withdrew the clerkship applications and told Harvard that the doctored transcripts had been sent out by mistake.

In a classic example of how the coverup is usually worse than the crime, Martoma appealed his dismissal from Harvard by arguing that he’d withdrawn the applications before he was caught and that the improper transcripts had been submitted accidentally. His efforts apparently involved creating a fake computer data forensics company, complete with a professional-looking marketing flyer, to corroborate the time stamps of his e-mails.

You didn’t just change a few grades! You created a whole fake company! You’ve got like seven aliases! You’re a real criminal, and because of your insider trading trial everyone knows it, and the fact of everyone knowing is a real source of suffering for you.

You see the same grounds for leniency in mafia trials in southern Italy. Yes, your honor, I’m a career piece of shit, but until now with omertà and all no one said it out loud. Show some mercy.

Capitalist Cosmic Convergence

Danny Kuo, who pleaded guilty in 2012 to swapping illegal stock tips, asked a judge on Tuesday to delay his sentencing so he can attend next month’s commencement ceremony at the University of Southern California’s Marshall School of Business and receive his MBA.

“The former Goldman Sachs trader had been slated to teach an undergraduate honors economics course beginning later this month—despite having been found guilty of defrauding investors.”

UD‘s own University of Chicago seems to have decided that Fabrice Tourre — America’s current poster boy for defrauding investors and failing to get away with it — will not after all teach its undergraduates how money works. The U of C has clearly been hemming and hawing about this decision for some time, and UD can imagine how that went.

Well, he’s a bright articulate young man with many years of malfeasance in front of him… Yes, and he’s currently unemployed and needs a job and we can provide one… But on the other hand what if all his students cheat and then explain to the administration that he cheats so why can’t they… Plus can’t you already see the Sunday New York Times Magazine feature Dropping in On Fabulous Fabrice’s University of Chicago Seminar

“Ethics education is carried out at the workplace. Forget the classroom.”

Uh-oh. So what do we do with the growing battalion of business ethics professors battering their incorruptibility into the stubbornly corrupt hearts of MBA students? Batter my heart, twelve-person’d ethics faculty, as John Donne might put it; yet if Annabel Beerel (the kind of name Vladimir Nabokov would have loved – it’s like a word game involving coming up with a name using the smallest number of letters) is right -

Most MBAs have their sights on gargantuan salaries and huge share options. Any discussion regarding excess CEO pay, for example, even when the company has clearly lost significant market value over a sustained period, is typically shrugged off with, “Well whatever is legal is OK.”

- and that’s only one of many points Beerel makes on the way to arguing that – as her headline has it – ETHICS TRAINING DOESN’T WORK.

Franchement, UD thinks she must be right, given all the battered by morally superior forces Wharton and Harvard MBAs out there insider trading and all.

But, with America’s large number of exquisitely, expensively educated white-collar crooks in mind, which business school will dare announce We’re firing our Force for Good and doing what UD‘s been, for years, saying we should do. We’re starting a speakers series featuring jailed miscreants who might scare at least a few of our students straight. I don’t see this happening. Amid the current crime-spree, B-Schools are compelled to look as though they’re doing something.

Know Your Oligarchs

What with Tom Perkins and the rest worrying about a populist uprising against America’s oligarchs or plutocrats or whatever, UD thought she might do a service by featuring particular people among this otherwise undifferentiated and therefore easy to stereotype mass.

Today’s guy is F. Perkins Hixon. “Perk,” as he’s known, grew up in Tennessee.

As a boy in Tennessee, F. Perkins Hixon said he “grew up listening to recordings of Maria Callas.” So after he moved to New York, he subscribed to box seats at the Metropolitan Opera, gradually upgrading to the top class, a parterre center box of eight seats, at more than $16,400 a season.

But love of opera was only part of the reason for subscribing, said Mr. Hixon, a senior managing director at Evercore Partners, an investment banking and strategic advisory firm. Even the ability to entertain far-flung friends was not the deciding factor.

The real issue was legroom. The chairs in a Met box, unlike the regular tiered seats, can be moved around.

“I’m six-foot-seven,” Mr. Hixon explained. “An opera lasts three to four hours, so if you don’t fit into your seat, it’s not very comfortable.”

Perk has trouble recognizing his own father.

[Last year, Evercore, the investment firm for which Hixon worked] received alerts from the Financial Industry Regulatory Authority, an industry regulator, and the company confronted Mr. Hixon about trading in accounts belonging to [his ex-girlfriend] and his father, according to the SEC.

At the time, Mr. Hixon said he didn’t know either of them, according to the SEC complaint.

“When confronted by Evercore with the fact that he claimed not to know his father, Hixon Jr. said that although he saw ‘Frank P. Hixon of Duluth, Georgia’ on the list and recognized him as having the same name as his father, he did not identify him to Evercore as someone he knew because ‘Hixon’ is a common name in the South and his father did not live in Duluth,” the SEC complaint said.

Perk, a Harvard MBA, is currently out of work.

Mr. Hixon, 56, was arrested in Manhattan on Friday morning by agents of the Federal Bureau of Investigation and charged with seven counts of securities fraud and one count of making false statements.

STANDING ON THE SHOULDERS OF GIANTS

Only 33, and already so adept at fudging conflict of interest for his own gain!

Well, you’d expect such a wunderkind on the faculty of Harvard Business School.

And it just goes to show the strides universities like Harvard – which has had you don’t wanna know from conflict of interest scandals! – have made in dealing with the problem. Really getting the message down to younger faculty.

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OTOH: This guy’s mom must be so proud! Look what sonny boy did! Still a pisher and he wrote something and the stock in that company just fell like a rock!

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All UD can say is: When your models at Harvard are COI giants like Andrei Shleifer and Joseph Biederman (search their names if you dare), the sky’s the limit.

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Oh, one more thing UD can say – and she always says it: Beware Beware Beware the B-School Boys.

And the winner is…

… Florida A&M!  They’ve already page-not-founded their securities fraud guy, an engineering professor who with his BFF, a finance professor at Florida State (How many times must UD tell you to Beware the B-School Boys?  See the category on this blog by that name.), was just found guilty of breaking a whole bunch of securities laws.

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UPDATE: The FSU guy remains on the faculty! That explains their not taking down his department page.

Way to pick ‘em, FSU. And hold ‘em.

“Anything we do to foster a culture of collaboration, rather than a culture of competition for scarce resources, is a way of training the elephant.”

Really?

Yet another b-school guy (read UD’s LONG category on this blog titled Beware the B-School Boys) wrings his hands about the criminogenic nature of some of America’s business schools… Which is to say that many MBA programs (in particular Wharton) seem to groom and then graduate real bad asses. What to do? What to do?

Like most of the other hand wringers, this guy’s introducing another whole new revolutionary approach to taking men in America’s most hyper-capitalist educational settings and turning them into women.

See the headline on the guy’s article?

CAN YOU TEACH BUSINESSMEN TO BE ETHICAL?

Forget businesswomen. Either they don’t exist, or if they exist they’re … ethical …? The whole article is men men men.

I guess businesswomen are ethical because they’re not businessmen.

So then the point would be to make businessmen businesswomen. No competitiveness here! We’re collaborative. And if you fuck up and act assertive in class…

MBA programs could ditch their heavy reliance on class participation when assigning grades – a standard that unfairly rewards extroverts and fosters competition among students to impress the professor. Instead, students could be asked to grade each other on their level of professionalism in class. A few of us at NYU-Stern have begun doing this, and we find that it discourages grandstanding and encourages students to build on each other’s comments.

Shh! Don’t say anything, Susie! Just keep your eye on Babsie and tell me whether you think she’s been abnegating herself…

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Ecoute. Collaboration in b-school means Raj Rajaratnam meets his co-conspirators there. B-school brings like-minded criminals together.

It’s embarrassing, but

The daily scandals that expose corruption and deception in business are not merely the doing of isolated crooks. They are the result of an amoral culture that we — business-school professors — helped foster.

Look at the dean of Columbia University’s business school, for goodness sake.

B-school people seem to think that if they keep producing worried rhetoric and new ethics institutes we’ll forget the nature of the amoral culture their schools reflect and many of their graduates inhabit.

The University of Western Ontario’s Highest-Profile Trustee…

… is Kevin O’Leary, a man who models b-school values so well that only Yeshiva University’s Ezra Merkin and Brown University’s Steven Cohen come close. We in the US can learn a lot from the capitalists up north.

Here’s Kev on the fact that “the 85 richest people in the world hold more wealth than the 3.5 billion poorest people.”

“It’s fantastic and this is a great thing because it inspires everybody, gets them motivation to look up to the one percent and say, ‘I want to become one of those people, I’m going to fight hard to get up to the top,’” he said. “This is fantastic news and of course I applaud it. What can be wrong with this?”

Atta boy, Kev! And bravo UWO. You really know how to pick ‘em.

“For Stanford, the bigger question today is whether it should revoke Martoma’s degree because he obviously lied his way into the school’s prestige MBA program.”

A cheater named Mathew Martoma
Lied his way to a Stanford diploma.
His scam MBA
Was so artful a play
It deserves to be hanging in MOMA.

“On Tuesday, a jury seated in the federal courthouse in Lower Manhattan heard the testimony of Dr. Ross, one of two doctors that prosecutors say Mr. Martoma corrupted to engineer what the government has called the most lucrative insider trading scheme in American history.”

Corrupted? Corrupted? Corrupted by the big bad hedgie!

Young Sidney who lived at the foot of the hill
Whose fame every virgin with envy doth fill…

How far the delicate lassie has fallen – caught in the clutches of SAC.

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