Applying the IMA’s Statement of Ethical Professional Practice (Adapted from  M. Elizabeth Haywood and Donald E. Wygal, “Corporate Greed vs. IMA’s Ethics Code,” Strategic  Finance, November 2004, 45–49).

The IMA’s Statement of Ethical Professional Practice was designed to help finance professionals  “to link ethical perspectives directly to their ongoing workplace responsibilities.” Unfortunately, some  individuals may choose to act unethically and perhaps cause great harm to other individuals and organizations. In each of the following examples, determine which of the four standards of ethical conduct  has been violated. Some examples may violate more than one standard.

a. Douglas Faneuil was a Merrill Lynch brokerage assistant who was involved in Martha Stewart’s  sale of ImClone stock. During the investigation, he lied to federal investigators, saying that  there was a standing order to sell the stock if the share price fell below $60. In return for lying,  Mr. Faneuil reportedly received money, airplane tickets, and an extra week’s vacation.

b. The day after Sam Waksal, ImClone’s CEO, learned that the Food and Drug Administration was  not going to review ImClone’s application for approval of a new cancer drug, family members  sold $10 million in ImClone stock. Mr. Waksal reportedly shared the information about the failed  review with his family.

c. Scott Sullivan, WorldCom’s chief financial officer, recorded billions of dollars of operating  expenses as capital assets. Depreciating these “assets” over time inflated the company’s profits  and hid the expenses from the company’s auditors.

d. Adelphia co-signed loans of $3 billion with its founders, the Rigas family, who used the proceeds  of the loans to purchase shares of Adelphia stock and other personal items. The family did not  disclose the loans to the board of directors. When the company’s auditors discovered the loans  and asked the Rigases to report them to the board, the family refused. The auditors did not report  the issue to Adelphia’s audit committee.