1. Which instances do you believe laws were broken? Why?

2. Which instances do you believe ethics were violated? Why?

3. Would you expect most companies with this opportunity to act in this manner? Or differently? Explain.

4. If there was a Chief Ethics Officer at Vulcan Inc, do you believe the outcome would have been different? In what way and why?

Vulcan, Inc. The Company Vulcan. inc. Is a multinational Fortune 200 company engaging principally in the exploration for and extraction oi minerals. It is listed on the New York Stock Exchange and has more than 615 million shares outstanding. The Meeting (March 7) On March 5, Stewart Myer. the company's CEO. personally telephoned Martha Bordeaux. the vice president for finance: Lamont Johnson. the chief geologist; and Natasha Bylinski, the vice president for acquisitions, to arrange a. March 7 meeting at the Atlanta airport. He emphasized to each of them the need for the utmost secrecy. directing them to arrange their travel to Atlanta as a connection to other and different destinations. When they all arrived at the meeting room, Myer reemphasized the need for complete secrecy. He then asked Johnson to present his report. The Report Johnson read his report: Over the past iew years we have conducted extensive aerial geophysical surveys oi the areas west oi the Great Plains. These revealed numerous anomalies or extreme variations in the conductivity of rocks. One appeared particularly encouraging, so late last year we began a ground geophysical survey oi the southwest portion of the 2 segment in Montana. This survey confirmed the presence of anomalies. Accordingly, on January 14 we drilled some core samples and sent them to our lab. The results were so extraordinarily promising that on February 10 we obtained more core samples and had them chemically assayed. On February 25. we received the assay, which revealed an average mineral content at 1.1? percent copper and 8.6 percent zinc over 600 feet of the sample's BSD-foot length. Johnson then commented. \"In my forty years in the business I have never seen such remarkable test results. On a scale of one to ten. this is an eleven." The Reaction Bordeaux exclaimed. "Our stock price will go through the root!\" Bylinski retorted, \"So will land prices!\" The Strategy Myer interrupted, \"Look. we're not here to celebrate. There are many better places to do that. We can't keep a lid on this very long so we have to strike soon. We need to line up the rig ht agents to acquire the land. We must iragmentthe acquisitions to keep the sellers In the dark. Most critical is maintaining absolute secrecy. No one else in the company must know this. I will decide who needs to know and I will tell them. it is your duty to the company to keep quiet. Now, let's discuss the acquisition plan.\" When sucked hnur hp hart mananpd in nhtain mm eamnlne without- tlnninn hit the nwnnre nt the land. Johnson explained. \"We pretended to be a motion picture company looking tor locations to remake the movie High Noon. We drilled the samples in isolated areas and quickly lled the holes. To further cover cur tracks, we drilled some barren core samples irom land we owned and hid the cores on our land." The Plan Bylinski outlined the plan to acquire the land. "We only own about 20 percent oi the land we want and we have options on another 15 percent. However, we currently own none oi the principal portion. 80 we have a lot bi work to do. We will employ several agents to negotiate the purchases. We will instruct them not to disease that they are acting for us. In tact, we will order them not to disclose they are acting for anyone. We need to acquire approximately twenty square miles of additional land." ' Bordeaux asked, \"What it the locals start getting curious?" Myer replied, "I'll deal with that later if it arises." Stock Options On March 15 Vulcan issued stock options at $23.50 per share to thirty of its executives, including Myer. Bordeaux, Johnson, and Bylinski. At this time neither the stock option committee nor the board oi directors had been informed oi the strike or the pending land acquisition program. The Rumors While the land acquisition plan was nearing completion. rumors about a major strike by Vulcan began circulating throughout the business community. On the morning of March 20. Bordeaux read an account in a national newspaper reporting that are samples had been sent out of Montana and inferring from that fact that Vulcan had made a rich strike. Bordeaux called Myer and told him about the article. The Press Release Myer prepared the following press release. which appeared in morning newspapers ct general circulation on March 21 : During the past iew days the press has reported drilling activities by Vulcan and rumors of a substantial copper discovery. These reports are greatly exaggerated. Vulcan has engaged in normal geophysical explorations throughout the West. We routinely send core samples to verify our visual examinations. Most of the areas drilled have been barren or marginal. When we have additional intormation we will issue a statement to shareholders and the public. Land Acquired On April 6, Vulcan completed its land acquisition program. It had employed seven dierent agents. In total, it had acquired thirty-seven parcels irom twenty-two diiierent sellers at prices ranging from $300 to $600 per acre. The land cost a total of approximately $6 million. Official Announcement At 10:00 am. on April 11, Myer released on behalf oi Vulcan an oflicial announcement of a strike in Montana containing at least 30 million tons ol' hlghgrade copper and zinc ore. The release appeared on the wire services at 10:30 am. The price of Vulcan stock shot up eleven points to $38 by the close oi business that day and continued to rise. reaching a price of $56 on May 16. (Figures 2-8 and 2-9 show the price and volume of Vulcan stock.) Figure 2-8 Stock Price of Vulcan, Inc. (note irregular intervals on time axis) 60 50 30 20 Figure 2-9 Average Daily Volume of Vulcan, Inc, Stock for Week (in 1,0003) 450 400 14 Jar 10 Feb Figure 2-9 25 Feb 1 Mar 450 400 7 Mar 350 15 Mar 300 18 Mar 250 21 Mar 200 Average Daily Volume of Vulcan, Inc., Stock for Week (in 1,000s) 6 Ap 150 11 Ap 100 15 Ap 50 2 May 16 May 14 Jan 21 Jan Loose Lips 28 Jan 4 Feb 11 Feb 18 Feb 25 F 4 Mar 11 Mar The Vulcan Executives 18 Mar 25 Mar 1 Ap Figure 2-10 holdings in Montana. These purchasers included the following: 8 Apr Prior to the April 11 official announcement, a number of people purchased Vulcan stock with 15 Ap knowledge of the mineral discovery. Some people also purchased land adjacent to Vulcan's 22 Ap 29 Apr 6 May Myer, Bordeaux, Johnson, and Bylinski each purchased shares or calls on several 13 May occasions during this time period. See Figure 2-10 for a listing of their purchases. 20 May Purchases of Vulcan Stock by Selected ExecutivesPurchaser Date Shares Price Calls Price Myer Jan. 20 10,000 18.00 Feb. 25 10,000 20.00 March 2 15,000 21.25 March 7 5,000 22.25 March 15 5,000 23.75 Bordeaux March 7 10,000 22.00 March 15 7,500 23.75 March 18 5,000 24.00 Johnson Jan. 20 5,000 18.00 Feb. 25 8,000 20.00 March 1 12,000 21.00 March 7 6,000 22.00 March 15 4,000 23.50 Bylinski March 7 5,000 22.00 March 15 3,000 23.50 March 18 4,000 24.25 The Eager Eavesdropper After leaving the March 7 meeting, Bordeaux and Bylinski went to the airport lounge to wait for their flights. They excitedly-and loudly-discussed what they had learned at the meeting. Several people overheard their remarks, and one of them, Rae Bodie, immediately called her broker and bought fifteen hundred shares of Vulcan stock. MS. Bodie also purchased a large tract of land next to Vulcan's site in Montana for approximately $600 per acre. The Crestfallen Security Guard On March 9, Johnson went into the home office very early to finish up the exploratory work on the new find. At the elevator he encountered Celia Tidey, one of the company's security guards. Johnson knew her fairly well, since they both had worked for Vulcan for more than ifteen years. Noting her despondent visage, Johnson asked her what was wrong. She related to him her tale of woe: her husband had become disabled and lost his job, and her son needed an expensive medical procedure that their health insurance did not cover Johnson felt great empathy for her plight. He told her that big doings were afoot at Vulcan and that if she bought Vulcan stock soon she would make a lot of money in a month or so. She took her savings and bought two hundred shares of Vulcan stock, which were as many shares as she could buy. The Avaricious Agent