In October 2010, a U.S. district judge upheld a decision made by the New York University Stern School of Business to deny an MBA degree to a student who had withheld that he or she had been convicted of insider trading. Ayal Rosenthal had pleaded guilty to conspiracy to commit securities fraud in 2007 when he told his brother insider information obtained when he was working at PricewaterhouseCoopers in 2005.

He was in the part-time MBA program at Stern at the time of the conviction and served 60 days in prison. Rosenthal had completed the requirements at Stern but was denied the degree after it was decided that he had violated Stern’s honor code and code of conduct. The judge ruled that Rosenthal had completed the degree requirements only by concealing that he had been convicted, and the question of whether he should receive the degree should rest in the hands of the MBA faculty. The president and CEO of the Association to Advance Collegiate Schools of Business (AACSB), the national accrediting association for business schools, stated it was the first time a business school had decided whether to award a degree based not on behavior within the program but on a student’s external professional dealings. Rosenthal’s defense attorney said the verdict was creating a “dangerous slippery slope,” giving the faculty full power to determine who receives an MBA degree. The underlying ethics question is whether the actions of a student outside the realm of academic requirements and behavior can supersede the actions and efforts of the student in completing his or her degree.

Questions

1. Do you think the correct decision was made? Why or why not?

2. If the student had been convicted before he started the MBA program, would that change the decision to deny his degree? Explain.

3. If the conviction occurred after he had graduated, should NYU have the power to revoke the MBA by citing the same violation of code of ethics? Explain.