… Boys.
… the shaky moral foundations of the business school.
… in the insider trading racket.
The University of Pennsylvania school is pumping out insider traders a mile a minute.
An economics professor writing in the New York Times notes the following scandalous fact.
The American Economic Association [has no] official ethics code. Sadly, some of its members seem to be in dire need of one.
See for yourself. “Inside Job,” Charles Ferguson’s new documentary on the financial crisis, includes revealing interviews with several academic economists whose public statements appear to have been rather closely aligned with their private bank accounts.
No doubt the AEA will object that it’s a purely scholarly organization, thinking thoughts about markets all the day. Tra la.
In a story over-invested with irony, a new financial research center at the University of Chicago which studies how to “measure, price, and hedge risk” may have disastrously failed in its own founding act of risk assessment.
Its donor, University of Chicago trustee Steven Stevanovich, allegedly made some of his immense fortune rather in the way Ezra Merkin made his — feeding funds to someone who turned out to be a Ponzi schemer. He’s being sued for 3.2 billion in clawback litigation arising from the Tom Petters scandal.
Stevanovich can’t be reached, and the University of Chicago is making no comment.
The Grade Change form UD uses at George Washington University is a small white piece of paper on which you’re given one line to explain why you’ve changed a student’s grade (I know not what others may do, but as for me, these forms are almost always about changing an Incomplete to a grade after a late paper or something has been submitted).
NYU’s business school must have had to use teeny weeny writing to fit in its reason for changing Rosenthal’s grade in his Professional Responsibility course to an F:
In February 2007, three months after completing his course work at NYU’s Stern School of Business, Ayal Rosenthal pleaded guilty to charges that he leaked to his brother secret tips that he learned at his job at PricewaterhouseCoopers LLP. Rosenthal never told the school about the investigation of him or his guilty plea, even while serving as a teaching assistant in a professional responsibility course…
NYU didn’t merely change Rosenthal’s grade; it rescinded his MBA degree. Rosenthal sued to get the degree back and the judge laughed him out of court.
Here’s another one. Business students at NYU love to hear him lecture on bankruptcy, but he may also know a lot about fraud.
This blog even has a category for it.
Beware the B-School Boys.
This is the third story along these lines that UD has covered. A business school professor offers his students an investment opportunity. The fools give him their their money, which he is now accused of having stolen.
“Being a college professor, I know it’s stupid now, but I didn’t even think about it being a scam. I thought, ‘This is just incredible,’” said Turnage.
Aaron Turnage, a Clayton State student, got taken by Stephen Williams, his business school professor. Williams also reportedly stole from his students when he taught at Georgia State.
Williams discovered something that Bernard Madoff and countless others have also discovered: A university affiliation (Madoff was a Yeshiva University trustee) is the most powerful character-colonic known to humankind.
Beware.
It’s a category on University Diaries. See it? And that’s because over the years UD has covered so many stories of generous MBA guys getting their names on university buildings, and then, when it turned out the money was a small part of an empire of stolen goods, getting their names sandblasted off the buildings, that she decided to collect all of the stories under one heading.
And here’s yet another one.
Ten years ago, the University of Michigan inaugurated Sam Wyly Hall. At the ceremony, the business school dean kvelled about “what the University of Michigan helped [Wyly] to do.”
Well, what Wyly and his brother have done – let’s see if we can be exact about this – what they’ve done, see, is “illegally trad[e] millions of securities of public companies while they sat on the company boards. The SEC complaint accuses the two of using a system of offshore trusts and subsidiaries to hide their interests, selling more than $750 million in stock over a 13-year period. The complaint charges that they used inside information about the pending sale of [one of their companies] to reap more than $31.7 million in profit…”
So… sandblast the whole name off? Expensive. Embarrassing. UD has a better idea. Just change one letter.
WILY HALL
This short paragraph from a Wall Street Journal profile of one of the world’s worst financial criminals allows UD to say to you once again (she says it all the time, most recently in this discussion of Amy Bishop) that being highly intelligent and getting a great university education has little – sometimes nothing – to do with morality.
Clifford Orwin, a professor of political philosophy, makes the point:
[G]ive me Mr. Madoff for one, two or three courses of ethics instruction and he would still be Bernie Madoff. Would he have learned anything from the experience? Yes, he’d talk a much better game of ethics. Thanks to my teaching, he’d be an even greater menace to society.
This year, I’m teaching 500 students about justice, and I’m not making a single one of them a better person. Those who already aspire to justice may refine their understanding of what it is. (They may also come to see that everything has its problems, even justice.) Those already minded to be good citizens may become more thoughtful ones. I believe strongly in what I do – I just don’t think that what I do is to improve the moral character of my students.
Students indifferent to justice just aren’t going to be won over to it by anything that I could say. Or that anyone else could say. A university course is not a revival meeting. I don’t cure palsies and I don’t plead with students to come forward to declare themselves for ethics. And if I did – and if they did – it wouldn’t mean a thing. Talk is cheap. Talk consisting of high-minded oaths and declarations of one’s moral seriousness is even cheaper.
By the time a student arrives at university, and a fortiori several years later when he ambles on to his MBA, his ethical character is already firmly set. Whether virtue can ever be taught was already a thorny question for Plato. Whether it can be taught to adults, in a classroom, shouldn’t be a thorny question for anyone.
Stanley Fish overstates the case, but he gets at it too:
Teachers and students of literature and philosophy don’t learn how to be good and wise; they learn how to analyze literary effects and to distinguish between different accounts of the foundations of knowledge. [Humane] texts [are] concerned with the meaning of life; those who study them, however, come away not with a life made newly meaningful, but with a disciplinary knowledge newly enlarged.
One of the corollaries of these truths is that business schools waste all sorts of money and generate all sorts of cynicism among their students by adding ethics courses to their curricula.
Business school catalogues should title these courses what they are: sops.
SOP 101
ADVANCED SOP
STUDIES IN SOP
CULTURAL REPRESENTATIONS OF SOP
ADVANCED INDEPENDENT STUDY: SOP
And this is just one case among many. Instead of sending fraudsters and insider traders and extortionists etc. to jail, their lawyers increasingly argue, sentence them to lecture in business schools.
Can you see where my mind’s going on this? We’ve got an economic crisis in this country (and in Canada, where Professors-to-be Drabinsky and Gottlieb live), and our universities are way stressed out. We’ve also got an ever-growing cadre of sophisticated businesspeople suddenly faced with a prison-or-community-service dilemma.
Hire them! Hire them all! They know a lot, and many of them are colorful characters who’d make good lecturers. And they don’t cost anything.
Take Ezra Merkin. Why shouldn’t Yeshiva University take him back? He was a trustee there for years; now he can be a lecturer.
Austerity measure bonus: Yeshiva probably still has stationery with his name on it.
Business school professors are expensive. If there were, say, a lottery system in which universities could bid on an active list of HAAs (House Arrest Adjuncts), some universities might be able to suspend their regular faculty altogether.
… with years of insider trading in front of him. Carrying on the family tradition of thievery while working toward his MBA at NYU, his life was shattered when the SEC got wind of what he, his father, and his brothers were doing, and put them all in jail. At the tender age of 26, Ayal Rosenthal had to go to prison.
NYU decided to revoke his degree onaccounta they didn’t want to be known as the school that made Ayal Rosenthal what he is today.
Rosenthal is suing the university. He wants his degree back.
*************************
It’s an interesting moral question. Should you be denied an education merely because you’re a precocious criminal? Universities don’t typically revoke the degrees of people who commit crimes after they’ve graduated. Do you think Wharton will revoke Rajiv Goel’s degree? Scads of insider traders and associated miscreants graduated from Harvard. Have you heard about any of them getting their degrees revoked?
Just because this guy was so smart he broke the law before he graduated, he has to suffer?
UD always says – UD has a specific category called – BEWARE THE B-SCHOOL BOYS. Finally she can mix up that gender thing.
Mary Tripsas is a Harvard business school professor who also writes for the New York Times. Against all conflict of interest policies at the Times, she let 3-M pay all her expenses for a trip to their headquarters. Then she went home and wrote this remarkably ass-kissing piece featuring the company. Cheap, free publicity for them; plus the NYT gets to look like the paid agent of a corporation.
… is a tag UD‘s used so much on this blog that she’s decided to make it a Category.
She’s about to use it again.
She’s always warning universities about their business school faculty. Her experience of this group, as she’s come to know it from keeping this her blog, convinces her that though to be sure most of its members are decent and upright, a disproportionate number of them (disproportionate to other faculty, that is) gets in serious financial and legal trouble. UD’s followed any number of stories of B-school professors – and B-school alumni – whose side or primary businesses become quite the embarrassment for their universities.
Take Wharton, at the University of Pennsylvania. One of its most beloved grads, Raj Rajarantnam, has just been arrested in “a $20 million insider trading scheme by federal prosecutors.” He and five others are charged with “using insider information in 2008 and 2009 to trade in shares of companies including Google Inc., Polycom Inc., Hilton Hotels Corp. and Advanced Micro Devices Inc., according the complaints filed in Manhattan federal court today.”
It’s awkward for U Penn. Not only do various fellowships and scholarships have his name on them; Wharton’s admiration of him in alumni publications now scans a bit ironic:
… Managing General Partner of the Galleon Group, Mr. Rajaratnam notes that Wharton was “an important credential” when he founded the company more than a decade ago. He also recognizes the School for helping him to land his first job in financial services, and for the skills he has used to succeed since then.
His experiences at Wharton continue to shape his life—in particular, through the relationships he formed. Having recently celebrated his 25th reunion, he says, “my classmates are among my closest friends and colleagues. A day doesn’t go by that I don’t interact with Wharton alumni.”
For Mr. Rajaratnam, he wished to give something back to “the institution that was so important to me personally and professionally.” In so doing, he is helping to create a community on campus that reflects the global business environment Wharton students are trained to lead.
To be sure, Wharton gave him a credential… Which must have made it easier to do what he is accused of having done. And as for the global business environment, if the charges are true, he has certainly done a number on it.
Ah men.
A former [University of North Dakota] hockey player and a current one were arrested about 3 a.m. Tuesday after a campus officer saw the men throwing cups, plates, a kitchen table and a lawnmower onto a Grand Forks street, UND Police Lt. Dan Lund said.
Joe Finley, 22, and Matt Frattin, 21, are both charged with disorderly conduct. In addition, Frattin faces a fleeing charge and Finley faces a charge of giving false information to officers. All the charges are misdemeanors.
Lund said Finley and Frattin were throwing objects from a residential garage on the 400 block of North Columbia Road, where one of the two men lives.
“It was their own property, so there was nobody’s property that was damaged other than their own,” Lund said. “They said they just kind of routinely destroy each other’s stuff.”