New Evidence in Favor of Active Internal Whistleblowing

Over two decades ago, two of the largest corporate bankruptcies in U.S. history sprung up one after another—first Enron, then WorldCom—after the companies became mired in accounting and financial fraud.  In 2002, in response to these ethics breaches, President Bush passed the Sarbanes-Oxley Act, which established many of the internal controls now common in U.S. public corporations. The Act also mandated, among other things, that public companies provide employees a hotline with which they could report any company wrongdoing anonymously—an early warning signal for the company’s Board and management to address bad behavior before risking the ruin of the company’s reputation by, for example, an external whistleblower incident.  


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How to Avoid Becoming the Next Wells Fargo

Last year, in September, CNN Business ran the headline, “The two-year Wells Fargo horror story just won’t end.”


By now, many have heard how it all began: In 2016 it was revealed that the bank fired over 5,300 employees for opening millions of potentially unauthorized or fraudulent customer accounts between 2011 and 2016. These “sales integrity issues,” as the bank put it, likely date back to at least 2002. Then in 2017, news came that Wells Fargo had charged unwarranted mortgage fees between 2013 and 2017 and foisted unneeded auto insurance on many of its customers, causing thousands to default on their car loans and have their vehicles repossessed. Last year, the public learned that Wells Fargo had also foreclosed on hundreds of homes due to a technological glitch. The bank recently agreed to shell out $575 million to settle claims with U.S. states. Matt Eagan, a CNN Business reporter, has been chronicling the bank’s failures since they began. “Wells Fargo initially minimized the millions of fake bank and credit card accounts as wrongdoing by bad actors,” he wrote last month. “It only later admitted the existence of [a] widespread cultural problem.” 


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End of Year Letter, 2018, from Jon Haidt and Azish Filabi

Stop the World—I Want to Get Off. The title of that 1960s musical captures a timeless sentiment, but it seems more common in recent years, and is perhaps especially on the minds of leaders of organizations and their ethics-and-compliance staff.  

In this era of rising political polarization and social-media fueled speculation, small things can quickly blow up and become very big headaches. Having an ethical, high-trust culture does not guarantee that you’ll avoid problems, but it can greatly reduce your risk. That’s one way to look at Ethical Systems Design: as a way to increase resiliency in the face of uncertainty and rapid change.

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Behavioral sciences inform public policy in Australia


In Australia the public hearings at the Royal Commission into misconduct in the financial services industry came to an end last week. Over the past year there have been 68 hearing days and 138 witnesses called to give evidence to the inquiry. And despite publishing a comprehensive interim report in September that forensically reviewed the causes of wrongdoing, Commissioner Kenneth Hayne has left few clues on what to expect in his final recommendations.

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SCHOLAR SPOTLIGHT: Todd Haugh offers insight on corporate governance


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Considering money: Dan Ariely argues there is more to life than money


A year since Dan Ariely published “Dollars and Sense: How We Misthink Money and How to Spend Smarter,” the social scientist and Duke University professor, writes “I’ve learned a lot about the truly meaningful value of non-monetary rewards in engagement, motivation, habits, loyalty, wellness and more.” Here Ethical Systems’ editor reflects on culture and values against the backdrop of Ariely’s hypothesis.

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Data & Behavioral Science: a new approach to risk management

I recently sat on a panel at an event hosted by Ropes and Gray LLP in connection with the launch of their new report, Data & Behav

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SCHOLAR SPOTLIGHT: Dolly Chugh discusses her new book

Dolly Chugh's new book “The Person You Mean to Be” serves as a guide to tackling issues from sexism to racism

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Purpose driven companies are winners

Caterina Bulgarella argues that purpose focused companies come out ahead in more ways than one. 

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September's In the News: Jonathan Haidt's Times' column; David Mayer on Ohio State's controversy and more

Ethical Systems' collaborators have had a busy September including op-ed's in The New York Times, publications in the Harvard Business Review and the launch of new books. 

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