Showing posts with label New York. Show all posts
Showing posts with label New York. Show all posts

Monday, November 30, 2020

CityMD: Wrongly Tells Patients They’re Immune From COVID-19 (May 2020)

    CityMD is a healthcare company that runs urgent cares based in New York.  When COVID-19 came to the United States and testing became available, many turned to CityMD for these services.  They also had antibody testing to determine if patients had antibodies to the coronavirus.  However, they ended up mistakenly telling patients that were positive for antibodies that they were now immune to the coronavirus, something that was not proven and might not be true.  After the news broke, CityMD came forward and acknowledged their mistake, and contacted the affected patients.  This analysis will look at this case from the ethical theories of individualism, utilitarianism, Kantianism, and virtue theory.  An individualist, who values maximizing profits within the law, would argue that this was wrong, as a mistake like this could hurt profits, even though nothing illegal was done.  A utilitarian, who values happiness for all, would feel negatively about this case because being lied to and in danger would make people unhappy.  A Kantian, who values treating people with respect, would say that this is wrong because people were lied to.  Lastly, a virtue theorist would say that CityMD acted unethically because they lied, violating the cardinal virtues.  Going forward, CityMD should be more proactive with reviewing what they put out and doing their research.  They should also continue to maintain transparency and take responsibility for their actions.

Company Background

    CityMD is an urgent care company that was co-founded in 2010 in New York, New York by four ER doctors, including Dr. Richard Park, CEO.  The company operates 136 urgent care centers throughout New York, New Jersey, and Washington state. (CityMD)

    CityMD’s aim is to make healthcare inclusive.  Their mission is to serve their communities by “providing quality medical care through convenient access and an exceptional experience, and we consider this mission with every patient that walks through our doors.”  They state that they hire the best board-certified doctors, and provide them with “ongoing medical training and information, along with the most modern technology.”  They are also “built upon the philosophy of serving patients with kindness.” (CityMD)

People wearing masks waiting to be tested
for COVID-19 outside CityMD in
New York City, April 30, 2020

    When the coronavirus came to the United States, with the first case being in Seattle and cases skyrocketing in the New York area, CityMD stepped up and started testing many people.  They now offer three tests for COVID-19: the rapid test, the PCR test, and the blood (antibody) test. (CityMD, 2020) The first two test for whether you currently have the virus, and the third tests if you have antibodies for the virus.  According to the Daily Telegraph, “CityMD administered about 314,000 [COVID-19] tests across New York City, as of June 26. In total, 26 per cent of the tests came back positive.” (Gale) They test at all their locations across New York, New Jersey, and Washington.

Ethics Case Controversy

    When the first COVID-19 case was diagnosed in the US on January 20th, no one expected it to get as big as it did.  But on March 11th, the World Health Organization (WHO) declared COVID-19 a pandemic.  Many places countrywide started to quarantine, and New York and New Jersey, being some of the first, started on March 28th. (NBC) On April 2rd, after many people had contracted and recovered from the coronavirus, the FDA approved the first antibody test for COVID-19. (Mandavilli)

COVID-19 antibody test
These tests were very new, and no one quite knew what they could tell us, other than whether or not someone had had COVID-19 at one point.  According to the University of Maryland Medical System, antibody tests are primarily being used to “help determine how widespread coronavirus infection is in certain communities.” (UMMS) They go on to say that “this can be beneficial for creating public policy and better understanding how to keep communities safe.”  Many, though, have taken these antibody tests as a sign of being immune to the coronavirus.  This is what most likely led to CityMD’s mistake.  The World Health Organization says that “most people who are infected with COVID-19 develop an immune response within the first few weeks after infection. Research is still ongoing into how strong that protection is and how long it lasts. WHO is also looking into whether the strength and length of immune response depends on the type of infection a person has: without symptoms (‘asymptomatic’), mild or severe.” (WHO)  While the antibody test shows that you had an immune response from the coronavirus, it doesn’t tell you whether you are protected enough from reinfection.  “In general, reinfection means a person was infected (got sick) once, recovered, and then later became infected again. Based on what we know from similar viruses, some reinfections are expected. We are still learning more about COVID-19.” (CDC) Dr. Maria Van Kerkhove, head of the WHO’s emerging diseases and zoonosis unit, said, “Four months into this pandemic, we’re not able to say an antibody response means someone is immune.” (WHO) Some sources “found that people who recover from even mild cases of COVID-19 produce antibodies that are believed to protect against infection for at least 5 to 7 months, and could last much longer.” (Schimelpfening) However, this is a new virus and the little evidence we have is not enough to prove immunity, “simply because not enough studies have been done yet.” (Schimelpfening) Despite the lack of evidence, on May 11th, the news broke that CityMD had told 15,000 people who had positive antibody test results that they were immune to the coronavirus. (Feuer)  They had made antibody tests available to those who had previously tested positive for COVID-19, those who believed they already had it and have been symptom-free for at least two weeks, and for those who believe they were exposed to the virus. (ABC) There was also no charge from CityMD for these tests, as they waived insurance copays.  This led to many people getting tested and being told that they were now immune, even though there was no solid research to show that this was true.  While CityMD might have been using unproven assumptions about immunity, it could also have been an honest mistake.  According to CityMD, the mistake was “due to an editing error in the patient portal,” and they described the situation by saying that “some CityMD patients have received incorrect information saying a positive result on the COVID-19 antibody test confers immunity...CityMD patients getting the COVID-19 antibody test are given several documents explaining that a positive result does not mean they are immune to COVID-19.” (Feuer) While we don’t have access to the exact documents that patients received, this must have confused many patients.  That being said, this mistake may have been an error from reusing documents from past viruses where immunity was known.  This led many people to believe, for at least a short time, that they were immune, which put them in danger of being careless and exposing themselves to getting reinfected. 
People in New York City during the pandemic
being careless by not wearing masks,
putting themselves and others at risk
“The common perception is that if you test positive for COVID-19 antibodies, you’re “safe” from COVID-19 and are immune. But there are many factors in antibody testing, and not all tests are created equal.” (Tripucka) In fact, Professor Helen Ward says, “This very large study has shown that the proportion of people with detectable antibodies is falling over time...We don’t yet know whether this will leave these people at risk of reinfection with the virus that causes COVID-19.” (Ellis) After CNBC reached out, CityMD did say that they “removed the incorrect language and will contact all patients to ensure they have the correct information,” however, it is uncertain how much damage had already been done by then by a company that many people looked to for safe, accurate information.  As of now, their website currently states, under the description for the antibody test, “This test will detect if you have had prior exposure to or infection with COVID-19 and have built antibodies for the virus. For most viral illnesses, a positive antibody means prior exposure to a virus and possible immunity to future infection. As COVID-19 is a novel (new) infection, it is unclear if a positive antibody offers immunity.” (CityMD, 2020)

Stakeholders

    This particular case has two main stakeholders.  On one side, we have CityMD and its executives, and on the other side, we have the patients of CityMD.  CityMD is responsible for the information they provide to their patients, and their patients should be able to trust CityMD to care for them and provide them with accurate information.  CityMD will be affected depending on how they handle situations of misinformation.  Patients will be affected based on who they trust and how long they believe potential lies.  Since CityMD is popular for its health care, people should be able to trust it, and breaching that trust could have dangerous effects.

Individualism

    One way to view this case is from an individualist perspective.  Milton Friedman’s theory of individualism states that a company has the responsibility to maximize profits for the owners (which are most often stockholders) within the law.  Right or wrong aside, as long as it’s legal and makes a profit, an action is considered permissible according to individualism.  The individualist would not view the CityMD case as permissible.  While nothing they did was against the law, they told patients misleading information, and as a healthcare company, this breach of trust could hurt their business.  When the news came out that they had done this, they acknowledged their mistake, but by then it was after the fact and the damage had already been done.  They surely must have lost customers and business from this situation, which means they aren’t operating individualistically.  They didn’t maximize profits and in this way, their action is deemed impermissible.

Utilitarianism

    Another way to view this case is from a utilitarian perspective.  The goal of utilitarianism is to maximize happiness for all in the long run.  Instead of “good” versus “bad”, things are measured based on what is good, better, or best according to how many people are happy, and how happy they all are.  A utilitarian would most likely take a negative view of CityMD’s case.  The two main stakeholders in this case were CityMD and its patients.  After we found out that CityMD made the mistake that it did, many patients had to find out that they were lied to, and CityMD had to own up to their faults and contact everyone.  Long term, neither party will be very happy.  After finding out they were lied to about their immunity and indeed in danger of reinfection, patients won’t be happy.  And after having to admit they were wrong and take a hit to their public image, CityMD also won’t be very happy.  While it is unclear from the research available whether there was backlash or a spike in COVID-19 cases after this incident, this was still an impermissible action that made many people unhappy.

Kantianism

    Another way to examine this case is with Kantianism, which is the philosophy of Immanuel Kant.  Kantianism’s goal is to treat every person with respect, not using anyone as a mere means, and not lying or manipulating in any way.  It doesn’t regard the ends so much as the means of how one got there.  No matter how “good” the results of an action are, the means to get there must follow Kant’s ethics to be considered permissible.  A Kantian would argue that CityMD’s case was a very bad situation.  First and foremost, 15,000 patients were lied to.  Even if it was an honest mistake, not putting in the effort to research or review what they’re saying is a disrespectful move by the company.  CityMD didn’t take the patients’ health and safety into consideration before releasing the information that said they were immune, and in this way, they violated the formula of humanity, which is the claim that people should not just be a means to an end.  CityMD treated their patients as mere means (by lying to them) to an end (making their company look good and profit).  Kant would be pleased that CityMD later told the truth, respecting their patients by correcting their mistake, but overall, this situation would be considered unethical according to Kant.

Virtue Theory

    The last way we’ll look at this case is with virtue theory.  This ethical perspective is all about one’s character, and whether or not they not only act virtuously but are virtuous.  It judges based on whether one acts with good character traits, specifically the four cardinal virtues.  The four cardinal virtues associated with virtue theory are courage, justice, honesty, and temperance.  In order for an action to be considered ethical, or permissible, one must act with all four of these virtues.  A virtue theorist would overall take a negative view of this case.  We can look at both the action and the aftermath to determine whether CityMD demonstrated these virtues.  CityMD did not act with honesty or temperance when they carelessly released false medical information regarding immunity.  However, CityMD did act with courage and justice when they owned up to their mistake and sought to tell all their patients the truth.  Other good business virtues such as fairness, humility, and good leadership were also shown by the way CityMD reacted to the problem they were faced with.  Since they didn’t show all of the cardinal virtues though, virtue theory would count this situation as unethical.

Justified Ethics Evaluation

    In my opinion, CityMD acted unethically.  They released significant medical information about immunity without making sure it was completely accurate, and for a healthcare company, that could have very dangerous effects, such as many patients getting reinfected with COVID-19 after thinking they were immune.  They did try to fix their mistake, but we don’t know how much damage was already done by then, and the fact that they made this mistake in the first place trumps the fact that they fixed it.  All four of the ethical theories we looked at agree with this view as well.  Lying to people about important health information is not ethical on any level.  This could have been avoided simply by reviewing things and being more proactive with doing research.

Company Action Plan

    CityMD’s problem was that they had led their patients to believe that they were immune to the coronavirus if they had received a positive antibody test.  When this mistake went public, CityMD was quick to admit that it was wrong and that this was because of an error in the patient portal.  They also contacted the affected patients to let them know as well.  CityMD did a very good job in resolving the issue by themselves, but they can still go a step further to improve.  They should be proactive in spreading the truth about COVID-19 and immunity to their patients and communities.  They should also be vigilant about the accuracy of the information they use or provide to patients.

    CityMD’s mission statement is to “make healthcare as inclusive as possible.”  An improvement to this statement would be a mission to “make healthcare inclusive while maximizing accuracy and transparency for patients.”  As of now, their focus is on the people they serve and how they serve them.  However, especially in the medical community, they need to pay just as much attention to the accuracy of the information they provide as to who it’s for.  This new mission strikes the right balance that allows CityMD to best care for their customers.

    There are a few core values that exemplify what CityMD should strive for.  These include customer safety, honesty, accountability, and learning.  They should work first and foremost for the patients and making sure they are safe and well taken care of, then they should be committed to continually learning and being honest about medical facts and about when they make mistakes.

    In order to ensure that this problem doesn’t happen again, CityMD can make sure to review all of the information that comes out of their company.  This may include hiring people to proofread their documents, or researchers to double check the accuracy of what they’re saying.  And if the issue was just a technical error in the patient portal, they can train people on how to use this resource and have IT make sure no mistakes go out.  In regards to their public image, no improvements or marketing schemes need to be made.  They did a great job at correcting their error and are currently back to being a thriving, respected business, opening new locations to this day.  However, this plan of committing to research and transparency will benefit them as a whole because they will become more knowledgeable and trusted, which is sure to increase profits as more people come to CityMD for their medical needs as a place that values inclusion and honesty, which is key for being an ethical business.


Sarah Mollin


References

“Coronavirus News: CityMD Changes Messaging after Telling 15,000 Patients with Antibodies in New York, New Jersey They Have Immunity.” ABC7 New York, WABC-TV, 13 May 2020, abc7ny.com/citymd-coronavirus-antibody-immunity-tests/6176201/.

Feuer, Will. “CityMD Mistakenly Told 15,000 People with Coronavirus Antibodies They're Immune.” CNBC, CNBC, 11 May 2020, www.cnbc.com/2020/05/11/citymd-mistakenly-told-15000-people-with-coronavirus-antibodies-theyre-immune.html.

“Coronavirus Disease (COVID-19): Herd Immunity, Lockdowns and COVID-19.” World Health Organization, World Health Organization, 2020, www.who.int/news-room/q-a-detail/herd-immunity-lockdowns-and-covid-19.

“Coronavirus Immunity.” University of Maryland Medical System, 2020, www.umms.org/coronavirus/what-to-know/diagnosis-symptoms/immunity.

Schimelpfening, Nancy. “How Long Does Immunity Last After COVID-19? What We Know.” Healthline, Healthline Media, 14 Oct. 2020, www.healthline.com/health-news/how-long-does-immunity-last-after-covid-19-what-we-know.

"Immunity in New York as high as 68pc, tests suggest; Antibodies Findings raise hope that affected areas in London could protect themselves from a second wave." Daily Telegraph [London, England], 10 July 2020, p. 11. Gale OneFile: Health and Medicine, https://link.gale.com/apps/doc/A629046739/HRCA?u=mlin_w_westnew&sid=HRCA&xid=35f0a5aa. Accessed 14 Nov. 2020.

“Reinfection with COVID-19.” Centers for Disease Control and Prevention, Centers for Disease Control and Prevention, 2020, www.cdc.gov/coronavirus/2019-ncov/your-health/reinfection.html.

Tripucka, Jennifer. “If You Tested Positive for COVID-19 Antibodies via City MD, You Should Read This.” Hoboken Girl, Hoboken Girl Publishing, 13 May 2020, www.hobokengirl.com/city-md-covid-19-antibody-testing-news/.

Ellis, Ralph. “COVID-19 Antibodies Decline Over Time, Study Shows.” WebMD, WebMD, 2020, www.webmd.com/lung/news/20201028/covid-19-antibodies-decline-over-time-study-says.

“On a Mission to Do More.” CityMD, www.citymd.com/our-story.

“COVID-19 Testing Information.” CityMD, 2020, www.citymd.com/news/covid-19-testing-update.

Mandavilli, Apoorva. “F.D.A. Approves First Coronavirus Antibody Test in U.S.” The New York Times, The New York Times, 2 Apr. 2020, www.nytimes.com/2020/04/02/health/coronavirus-antibody-test.html.

NBC New York. “CDC Issues 14-Day Travel Advisory for New York, New Jersey, Connecticut.” NBC New York, NBC New York, 28 Mar. 2020, www.nbcnewyork.com/news/local/even-with-relief-bill-passed-no-rest-for-ny-as-cuomo-says-peak-of-crisis-still-yet-to-come/2348306/. 

Sunday, November 29, 2020

New York hedge fund founder charged with fraud tied to Neiman Marcus bankruptcy (2020)

Neiman Marcus Store
This article focuses on the ethical theories of Individualism, Utilitarianism, Kantianism, and Virtue Theory. The company Neiman Marcus filed for bankruptcy, which caught the eyes of hedge fund founder Daniel Kamensky. Kamensky was bidding up against a New York investment bank to purchase shares in the company. Kamensky bid less than the investment bank, which led him to blackmail the bank to back out of their bid. As a result, the hedge fund founder was hit with multiple federal criminal charges, such as securities fraud, wire fraud, extortion, and obstruction of justice. As a Kantian the proper action would have been to counter-bid against the investment bank, keeping business legal. Kamensky extorted his rival so that he could make a greater profit on the bankruptcy. Kamensky lacks Utilitarianism as his actions do not benefit the majority. The investment bank is not happy with the outcome and Neiman Marcus is losing out on money. There was no respect shown to the investment bank as Kamensky did not seek to make a rational decision in this situation. Kamensky violated virtue theory by interfering with the four main virtues of character which are courage, honesty, self-control, and fairness, that allows things to function properly. Neiman Marcus can create an auction to sell off the assets left and Kamensky's company can build an investment team. This will guarantee that Marcus sells the assets at the highest offer and the company would not face any foul-play.

Controversy

A New York hedge fund manager has been hit with multiple federal criminal charges for his alleged role in being the aggressor to a rival so that he could make a profit from the bankruptcy of Neiman Marcus. Daniel Kamensky who is the founder of Marble Ridge capital was slapped with charges of securities fraud, wire fraud, extortion, and obstruction of justice by the federal prosecutors. Kamensky was serving as a co-chair of unsecured creditors in the Neiman bankruptcy. He used his position on the committee to get the upper hand on an investment bank from offering a higher competing bid on some of Neiman's assets that he coveted for himself. Kamensky knew of the bankruptcy and made his offer on the assets prior to the court hearing for the bankruptcy. He seemed to have a personal agenda on what he could do if he was able to acquire this company. This alleged scheme began in late July when Kamensky and Marble Ridge offered to scoop up assets that are related to the Neimans bankruptcy for 20 cents a share before Neiman bankruptcy court hearing placed on August 3rd.

Daniel Kamensky pictured next to a closed Neiman Marcus
On July 30th, Kamensky learned that the investment bank was preparing an offer on the same assets that he believed he would receive for 20 cents per share. The difference is that the investment bank offered a higher amount than Kamensky at 30 to 40 cents per share which didn't sit well with Kamensky. The next day he called the senior analyst at the bank and made it clear that he had the exclusive rights to buying the shares and would use his power on the committee to keep the investment bank from offering a bid. He used the power that he doesn't have on the investment bank to threaten and also force them to retract their bid so that he could benefit from the bankruptcy. He threatened the investment bank that the Marble Ridge would pull their business from the bank if they did not comply with Kamensky’s demands. This is unethical because it is illegal to threaten other bidders to get what he wanted out of the deal. Everyone has the rights to bid for the company's assets with the highest bidder being the winner. The investment bank withdrew its offer and informed Neiman's lawyers of Kamensky’s actions. “Prosecutors said after the bank withdrew its bid, Kamensky tried to cover his tracks by asking an employee in a recorded call to tell the committee and law enforcement he suggested the bank bid only if it were serious.”(CNBC). Kamensky was pleading, “Do you understand… I can go to jail?” and “They’re going to say that I abused my position as a fiduciary, which I probably did, right?” (CNBC). 

STAKEHOLDERS

In business, stakeholders are essential to a company. The stakeholder in this situation is Neiman Marcus, Daniel Kamensky, and the investment bank is potential shareholders of Neiman Marcus assets. As Neiman Marcus is going bankrupt it allows these companies to purchase the assets in the company. Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. These companies want to purchase Neiman Marcus assets because they believe that they can make money from them or are getting a great deal that will lead to more capital in the future. This bankruptcy has a big impact on the employees, customers, suppliers, and banks as selling the assets could be the only way that Neiman Marcus could pay back these stakeholders.

INDIVIDUALISM

There are two versions of individualism that point out actions to achieve the same goal. These goals help the company remain profitable. The first version is Friedman’s who believed that the only job of the company is to maximize profit from the company. The second version is Machan’s, whose goal is to make a profit off the business while maximizing profit within the law. In this situation, Daniel Kamensky didn't think about anyone besides himself. He wanted to maximize his profits by being able to purchase these assets at a low price, so in turn, he could sell them for a higher price which would allow him to have a bigger profit margin. This would have been very profitable if he was able to buy the shares at 20 cents per share. By breaking the law Kamenskey thought that he would capitalize on the investment. He didn't fairly win the assets by having the highest bid. He forced the investment bank to withdraw its offer so that he could benefit himself. He broke the rule by taking away profit from Neiman Marcus who could have maximized his profit by taking the 30-40 cents that were offered from the investment bank. Business actions should maximize profits for the owners of a business but do so within the law which Kamensky didn't do. The investment bank would have found a way to make Marcus a profit even though the company was going bankrupt; they provided Marus with the highest offer for the assets. 

Utilitarianism

Utilitarianism measures happiness as the only thing of value and they count happiness as pleasure and freedom from pain”.(Salazar)All beings that are capable of experiencing happiness. Utilitarianism maximizes the happiness in yourself and others while everyone's “happiness or pleasure becomes the only things of intrinsic value”.(Mill) Intrinsic value searches for the good things that bring smiles to one's face and makes a person happy overall by focusing on the outcome. Daniel Kamensky did not maximize the happiness of all besides attempting to for himself. Business actions should aim to maximize happiness in the long run for all conscious beings that are affected by the action. The investment bank was impacted by Kamensky's decisions as he took the happiness away from the bank. He took the happiness from the bank as they believed they had an equal opportunity to make a bid on acquiring Neiman Marcus assets. This false hope also leaned on Neiman Marcus as a company that's going through bankruptcy would want to get as much money as they could from selling off their assets. Kamensky broke the law and also tried to frame the analyst from telling others once he realized that he took the happiness away from the investment company. Taking the happiness away from the investment bank put him in hot water and also made the public aware of the unethical person he is. He used his power for personal gain that didn't leave anyone happy.

KANTIANISM

“The formulation of humanity, states that it is wrong to use people as a mere means to get what you want.”(Salazar) Treating someone as a mere means gives you the upper hand on a person. The formulation states that it is wrong for someone to take advantage of a person to get what they want out of a situation. In this situation, Daniel Kamensky is someone who is trying to benefit for personal gain. Kamensky manipulated the investment bank to get his way by threatening and lying to get the bank to take back their offer. This goes against Kantianism as he did not act in ways that showed respect or honored the investment bank and their choices. The rational thing to do in this situation would have been to place a higher bid than the investment bank that would leave Neiman Marcus no choice but to accept his offer. He decided to be a bully and demand the investment bank to back off from the opportunity which was a way to cheat himself to a better opportunity. He will no longer be trusted in business and broke the rules of Kantianism. Immanuel Kant states that an “act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means”(Kant). Kamensky even went as far as trying to get the employee from the bank to lie to cover up the scheme. The investment bank analyst acted rationally by being motivated to do what's right because it's the right thing to do.  This relates to the universal law that you can't do something without also ensuring that it becomes universal for everyone else to do. This has to be morally right, rational, and permissible to be Kantianism.

VIRTUE THEORY

Virtue theory promotes the wellness or flourishing of individuals within a society. Virtue theory asks about a person’s character and assesses whether a person is virtuous or not. Virtue theory consists of four main virtues of character which are courage, honesty, self-control, and fairness, which allows things to function properly. Daniel Kamensky has had a very successful business career until this situation which changed his life completely. He had character traits that belong to people who can be virtuous such as courage, wisdom, prudence, intelligence, insight, and leadership. The vices that have been severely detrimental to otherwise savvy and innovative business people include greed, dishonesty, and selfishness. FBI agent William Sweeney said, “Kamensky violated his duty on the Official Committee of Unsecured Creditors in the Neiman Marcus bankruptcy by blocking the sale of securities to an investment bank so his fund could pursue them 'at a significantly lower price.” (daily mail). This manifests his lack of the characteristics of a virtuous businessman. He was dishonest and lacked self-control. Kamensky may have thought he was being prudent by making this plan that would benefit him financially however he was not thinking of the consequences it could lead to if he was exposed. He lacked insight making this poor choice that ruined his career and lost his respect as a leader. Daniel showed this with the way he became greedy for Marcus’s assets and no longer thought rationally enough to recognize the consequences of his actions after he had done something unethical in business. Virtue theory focuses on the consequences of actions that Kemensky felt would not apply to him. This shows a lack of judgment and character on his part. 

JUSTIFICATION ETHICS 

After reviewing this case I believe that everyone in business should think like the associate of the investment bank. The associate did the right thing in this case and stopped someone from trying to get away with an unethical crime. He decided to put things in his hands in a way that would best benefit him. This situation was unethical in every aspect. The investment bank was ethical in this situation and did the right thing in reporting this situation to the right people so that no one else could get manipulated by Kamensky. He abused his power and tried to take advantage of the investment bank to show that he has an upper hand on them.  Forcing them to withdraw their bid or losing Kamensky from doing business with the bank in the future was the ultimatum that was given. Kamensky clearly believed that his business interactions with the bank would be more important to them than buying the assets. Kamensky thought he had the power to make the bank back down and they would cower instead of following the proper legal action of reporting his unlawful acts as they did. I believe that he could have approached this situation differently and even found a way to both get a piece of Marcus’s assets. Under oath, Kamensky tried to gain sympathy and explain his recorded conversations with Marcus employees as “a terrible mistake” and “profound errors in lapses of judgment” (CNBC).

  Kamensky didn't look at the bigger picture and how it would affect not only him but make the company look worse for his actions. Kamensky took away potential profits that Marcus could have earned in this situation if he was ethical and did the right thing of just bidding higher than the investment bank. Instead, he threatened them to get rid of their bid and stop business with them there would have been no situation if things were done rationally and the right way. Looking at it from Kaminsky's perspective he knew what he did was wrong and would get him in a lot of trouble. He wanted the analyst to brush the things he said off so that he wouldn't be seen for who he truly is. Daniel Kamensky was wrong in this situation, unethical in my opinion, and the bully that has finally got caught in action. 

ACTION PLAN

Daniel Kamensky destroys his career by aggressively trying to acquire Neiman Marcus assets by threatening an investment bank to get a lower offer. Following Daniel Kamenskys arrest Neiman Marcus should now be able to properly put out the assets for sale and allow companies to bid on the assets. They will also be able to get the best offer without a company withdrawing due to a competitor threatening the competition so that they can benefit more. This could be a better opportunity for the investment bank to get the assets at a lower price than they initially anticipated paying. I believe that they should have an auction that will allow everyone to keep bidding until the highest offer is met which will allow Neiman Marcus to get as much money back as possible. With this in place, it would leave the company with a more direct way to get rid of the asset. Neiman Marcus could implement the auction to cause a smoother transaction and allow everyone to have a fair chance at buying the assets. It would be best if the company makes everyone aware of the opportunity of acquiring their assets.

One idea for the company that Daniel Kamnesky worked for is to develop a team of people that decide what to invest in and at what cost. This will prevent power trips and irrational things from happening if there is a team of people that essentially come together to make a decision. This will help make the decision being made a collective effort compared to one person who could possibly use their position to overpower the decisions being made. This plan will create a voting system that will implement everyone's opinion in the team to equally come to an agreed decision. The plan relates to the mission statement of wanting to expand and creating equal fair opportunities for future growth within the company. The core values are great service, trustworthiness, loyalty, and integrity of the business which will all be followed in this business plan. The company would have to market the changes that they made to gain the trust of the people back. They could make a pitch to the people that explain how internally, this will not happen in the future and apologize for the mistake. This will ensure that decisions will be made ethically and will come to a collective decision before pursuing an action.


These facts and analyses are based on an original research paper by Octavien Abrahams,
"New York Hedge Fund Founder Arrested And Charged With Fraud, Extortion, And Obstruction Of Justice In Connection With Neiman Marcus Bankruptcy"
WORKS CITED

Goodwin, Jazmin. “Hedge Fund Founder Charged over Fraud Connected to Neiman Marcus Bankruptcy Bid.” CNN, Cable News Network, 3 Sept. 2020, www.cnn.com/2020/09/03/investing/neiman-marcus-marble-ridge-bankruptcy-fraud/index.html.

“Hedge Fund Founder Arrested In Neiman Marcus Bankruptcy Scheme: These Are the Latest Developments.” Yahoo!, Yahoo!, www.yahoo.com/lifestyle/hedge-fund-founder-arrested-neiman-184237891.html.

McEnery, Thornton. “Hedge Fund Founder Charged with Fraud Tied to Neiman Marcus Bankruptcy.” New York Post, New York Post, 3 Sept. 2020, nypost.com/2020/09/03/hedge-fund-founder-charged-with-fraud-tied-to-neiman-marcus-bankruptcy/.

Stempel, Jonathan, and Lawrence Delevingne. “New York Hedge Fund Founder Charged with Fraud over Neiman Marcus Bankruptcy.” Reuters, Thomson Reuters, 3 Sept. 2020, www.reuters.com/article/us-usa-crime-kamensky/new-york-hedge-fund-founder-charged-with-fraud-over-neiman-marcus-bankruptcy-idUSKBN25U2RL.

“New York Hedge Fund Founder Charged with Fraud over Neiman Marcus Bankruptcy.” CNBC, CNBC, 3 Sept. 2020, www.cnbc.com/2020/09/03/new-york-hedge-fund-founder-charged-with-fraud-over-neiman-marcus-bankruptcy.html.

 Salazar, Heather. The Business Ethics Case Manual

DesJardins, Joseph. An Introduction to Business Ethics. New York City: The McGraw-Hill Companies Inc, 2014.

Dailymail.com, K. (2020, September 03). Hedge fund founder is charged with fraud in Neiman Marcus bankruptcy case. Retrieved November 30, 2020, from https://www.dailymail.co.uk/news/article-8695895/Hedge-fund-founder-charged-fraud-Neiman-Marcus-bankruptcy-case.htm



Friday, April 6, 2018

DraftKings: Falsifying Advertisements (2016)

Controversy:

DraftKings' website home page
        DraftKings is a daily fantasy sports company in which players place bets daily on professional sports. People who play these games can bet directly on sporting events or they can choose lineups of athletes from professional sports and compete to see if their team can gain the most points. There are always opportunities to gamble each and every day because games are played on a daily basis. In America, this kind of gambling has become quite popular recently. The question that all players of DraftKings have is how much they can actually win by partaking in these gambling games. In the several weeks leading up to the 2015 National Football League season, DraftKings and its fantasy counterpart FanDuel “spent more on advertising than the entire American beer industry” as they attempted to grow larger (Van Natta Jr.). However, the information that DraftKings’ revealed in their ads was fudged in attempt to appeal to the general public. This information was inaccurate regarding the amount of money a person could actually win playing their games. In fact, “one DraftKings disclaimer cited by the attorney general’s office stated that the ‘average user’s winnings for the last 12 months [was] $1,263.’ But that figure failed to account for fees and losses” (Shen). With that, it was deemed that DraftKings did not properly advertise the significant advantages professional players have as well as the fact that they “fail[ed] to disclose the dangers of gambling addiction” (Lovett). Essentially, DraftKings was only displaying the winning figures, not the money that the average user had to spend in order to play the game nor was the money that they lost exhibited.

        The unethical advertisement strategies by DraftKings led to a six million dollar lawsuit ordered by the New York Attorney General Eric Schneiderman in October of 2016. The lawsuit was placed to resolve “false and deceptive advertising practices by the company” (Gouker).

        The stakeholders in this case include DraftKings as a company, the New York State Attorney General, the players of DraftKings along with their friends and families and even private bookmakers. All these people are affected by the lawsuit that occurred against DraftKings. In brief, the players are either losing money and becoming frustrated with the company that would result in the company losing some business or they are winning money and are thrilled. On the other hand, bookmakers could start seeing more people seeking them out for advice on what to bet on and how much to bet.


Individualism:

According to Individualism, a business' only concern is to maximize their profits while remaining within the realms of the law of society and human rights. It is deemed as a direct violation against stockholders if a business is not maximizing profits because a business has the duty of maximizing profit for those that hold stock in their company. In the case of DraftKings, their actions were unethical according to the theory of Individualism. With their false advertisements, they intended to maximize profits by marketing appealing prize money that a person could win. However, due to the fact that they “misled novice players about the substantial advantages that high-volume professional players had,” their advertisements were ethically impermissible under Individualism. Additionally, DraftKings “misled players about the likelihood that they would earn a positive return” (Drape). Although DraftKings attempted to maximize profits with their advertisements, the fact that they went against the law by falsely advertising their games makes these actions unethical according to Freidman’s Individualism.


Utilitarianism:
Drew Brees, one of the NFL's top quarterbacks.


        Utilitarianism has its main value focused on overall happiness. It says that actions taken by a business should aim at maximizing the happiness of all those who are affected and who are capable of feeling pleasure and happiness. In order to accurately analyze DraftKings’ actions based on Utilitarianism, all the stakeholders involved must be considered. Under Utilitarianism, the advertisements displayed by DraftKings are ethically impermissible. The players who are losing money to DraftKings are upset because they were lied to and expected to win at least something in return. Also, there is no happiness amongst the friends and family of the players of DraftKings because their loved ones are losing money. The lawsuit against DraftKings implies that DraftKings as a corporation is not happy both because they have a bad reputation now and it could affect the amount of people that play their games. In fact, DraftKings “briefly stopped operating in New York” after the lawsuit (Lovett). As a result, DraftKings lost some of their revenue on top of the six million dollar lawsuit they faced. The attorney general of New York is aggravated and annoyed by the actions of DraftKings because he does not want to see the people living in New York being lied to and cheated. The only other stakeholder that could benefit from this is a private bookmakers because they will make money off of those who seek their help for advice on what to bet on. This could also make the players of DraftKings even angrier because now they would have to spend even more money to be able to gamble more intelligently. Although there are some people that benefit and are happy with the actions of DraftKings, more stakeholders are upset and bothered because they are losing money and being lied to. Because the overall feeling is dissatisfaction, the advertisements put out by DraftKings are ethically impermissible according to the beliefs of Utilitarianism.


Kantianism:

        Kantianism is an ethical theory that states that a business should act in ways that respect all individuals and the choices they make. Actions made by a business are considered ethical if they do the right thing for the right reason. In order for an action to be deemed permissible, companies must use informed and rational consent from all those who are involved. Under Kant’s Formula of Humanity, it is morally wrong to use people as a mere means to get what you want. Business entities should not exploit, deceive or harm any of their customers for their own benefit. The actions by DraftKings are considered morally wrong and ethically impermissible under Kantianism. The attorney general was quoted as saying “no company has a right to deceive New Yorkers for its own profit.” The fact that DraftKings lied to and deceived their customers directly violates Kant’s aforementioned Formula of Humanity. DraftKings intended to exploit their customers to gain revenue for their company by wrongfully advertising their fantasy sports games. Another important aspect to look at when discussing Kantianism is the fact that gambling is a severely addicting hobby. Making it more appealing to play, DraftKings removed the ability of those addicted to gambling to be rational because they believe that they can win a large quantity of money because that’s what was advertised to them.
Virtue Theory:
Aaron Judge (left) and Jose Altuve (right) are two
of the best players in the MLB. Players that
are often bet on by those playing DraftKings.
The Virtue Theory is based on four major virtue characteristics which are courage, honesty, temperance and justice. Courage relates to risk-taking and the willingness of a business to stand for the right actions. Honesty means that a business should be honest with all agreements that they make. Temperance ensures that a business maintains reasonable expectations and justice correlates to a business being fair in all their practices. For DraftKings, their unethical advertisements were intended to help them flourish by getting more people to play, thus more revenue for the corporation. However, under Virtue Theory, DraftKings’ advertisements are considered unethical and morally wrong. DraftKings may have flourished temporarily after they released their advertisements, but looking at it in the long run, their lawsuit and decrease in people who played their games reveal that the company did not flourish. By being unethical with their advertisements, DraftKings risked the company’s identity because now people who used to play might not want to play anymore because of the bad connotation that DraftKings has. It is also evident that DraftKings did not live up to their agreements because they advertised that people had an excellent chance of winning money, which was proved to be false. For these reasons, DraftKings was unethical according to Virtue Theory.
       
Bibliography
Shen, Lucinda. “DraftKings and FanDuel Settle New York Lawsuit for $12 Million.” Fortune, 26 Oct. 2016,
fortune.com/2016/10/26/draftkings-fanduel-settlement/.
Van Natta, Don. “The inside Story of the Quick Rise and Quicker Fall of DraftKings and FanDuel.” ESPN,
Gouker, Dustin. “DraftKings, FanDuel Pay $6 Million Each To Settle New York Case.” Legal Sports Report,
Lovett, Kenneth. “FanDuel, DraftKings to Pay $6M Each in Fines for Deceptive Ads.” NY Daily News,
Korman, Chris. “DraftKings and FanDuel Are Fun, Addictive, and Completely Unfair for Most Fans.” USA
Today, Gannett Satellite Information Network, 18 Sept. 2015, ftw.usatoday.com/2015/09/daily-fantasy-sports-football-drafkings-fanduel-commercials.


Drape, Joe. “DraftKings and FanDuel to Pay $6 Million Each to Settle New York Claims.” The New York
“DraftKings | Daily Fantasy Sports For Cash.” DraftKings - Daily Fantasy Sports for Cash,
Salazar, Heather. Western New England University. Spring Semester 2018 Class Notes.
Salazar, Heather. “The Business Ethics Case Manual: The Authoritative Step-by-Step Guide to
Understanding and Improving the Ethics of Any Business.”