Do you agree with Henry Yuen's assertion that a businessperson who is complying with all applicable laws and regulations is, by definition, behaving "ethically"? Defend your answer.

In June 2004, the SEC and KPMG reached an agreement to resolve the allegations that the firm's GTGI audits had been deficient. KPMG agreed to pay a $10 million fine, which at the time was the largest fine ever imposed on an independent audit firm by the SEC.¹⁶ The SEC also censured KPMG and sanction four of the firm's auditors involved in the relevant GTGI audit engagements. The latter individuals included the engagement audit partner, co engagement audit partner, review partner, and senior audit manager who had been assigned to one or more of those engagements. Each of these individuals was suspended from practicing before the SEC for one or more years.

In February 2006, Elsie Leung, GTGI's former CFO, agreed to pay $1.3 million to resolve pending SEC charges that she had participated in the fraudulent scheme to misrepresent GTGI's financial statements. Leung was also permanently barred from serving as an officer or director of a public company.

After a three-year court battle in a civil case, a federal judge ruled in March 2006 that Henry Yuen was guilty of securities fraud, falsifying GTGI's accounting records, and lying to his former company's independent auditors. The judge ruled that Yuen had to pay the victims of the GTGI accounting fraud $22.3 million. To date, the only criminal complaint filed against Yuen has been for obstruction of justice. Yuen allegedly destroyed documents during the course of the federal investigation into the GTGI accounting fraud. Yuen resolved the obstruction charge by agreeing to a plea bargain deal offered by the U.S. Department of Justice. This deal required Yuen to pay approximately $1 million in fines and to serve six months of home detention.

In December 2007, GTGI was purchased by another company for $2.8 billion, an amount that was a small fraction of the company's total market value shortly after the merger with TV Guide International. To date, Yuen's muchhyped EPG technology has not lived up to its great expectations. According to a New York Times reporter, "Mr. Yuen's vision for the electronic programming guide as a major money maker has yet to materialize."¹⁷