The “Look Policy” & a Class-Action Lawsuit

Abercrombie & Fitch’s “Look Policy” requires workers on the floor to wear “clothes, accessories and footwear that are similar in style and fit to the brand, and that are consistent with the current fashion season and colors” but that aren’t “clearly that of a competitor.”

Questions:
1. Economic historian Price V. Fishback wrote that, “The company store is one of the most reviled and misunderstood of economic institutions. In song, folktale, and union rhetoric the company store was often cast as a villain, a collector of souls through perpetual debt peonage. …The attitudes carry over into the scholarly literature, which emphasizes that the company store was a monopoly,” [thereby funneling workers’ incomes back to the wealthy owners of the company.] Does this characterize the class action suit at Abercrombie or is it about something different? Discuss.
2. How many Abercrombie & Fitch employees claim that they were illegally required to buy the company’s clothing for work?
3. How has Abercrombie’s strict employee dress code recently gotten it in other legal trouble?
4. What other practices may also get the company in trouble?

Source:
Covert, B. (2015). Class Action Lawsuit Advances, Claiming Abercrombie Employees Were Forced To Buy Abercrombie Clothes. Think Progress, July 17 (Retrievable online at http://thinkprogress.org/economy/2015/07/17/3681739/abercrombie-class-action/)

AF



Corporate Culture Sinks the Firm

The chief executive of Toshiba and two of his predecessors resigned, along with several lesser executives, over accusations that they drove the company to overstate its earnings by $1.2 billion over the last seven years. The figure is equal to about a third of the pretax profits that Toshiba reported during that period.

Questions:
1. How was the fraud exposed?
2. According to the article, why were senior executives singled out for the blame in this scandal?
3. How many directors on Toshibas’s 16-member board were removed?
4. What happened to Toshiba’s share price?

Source:

Soble, J. (2015). Scandal Upends Toshiba’s Lauded Reputation. The New York Times, July 21, (Retrievable online at http://www.nytimes.com/2015/07/22/business/international/toshiba-chief-and-7-others-resign-in-accounting-scandal.html?hpw&rref=business&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well)



The New Age of Performance Evaluations

Beginning in September, Accenture, one of the largest companies in the world, will get rid of the annual performance review.

Questions:
1. By disband rankings and the once-a-year evaluation process, what does the company hope to accomplish?
2. According to the article, what percentage of Fortune 500 companies have gotten rid of rankings?
3. What major accounting firm got rid of rankings and the evaluation process in March of this year?
4. Brain research has shown that even employees who get positive reviews experience negative effects from the evaluation and review process. List the negative effects given in the article.

Source:
Cunningham, L. (2015). In big move, Accenture will get rid of annual performance reviews and rankings. The Washington Post, July 21 (Retrievable online at http://www.washingtonpost.com/blogs/on-leadership/wp/2015/07/21/in-big-move-accenture-will-get-rid-of-annual-performance-reviews-and-rankings/?tid=pm_pop_b)

digital brain 2



The Question of Undue Hardship

July 20, 2015 Edited by  
Filed under Uncategorized

The bankruptcy case of Janet Roth stirred a debate over the rigidity of the “undue hardship” standard in discharging student loans. This year, President Obama instructed several governmental agencies to review, by Oct. 1, whether the treatment of student loans in bankruptcy should be altered.

Questions:
1. How did Ms. Roth prepare for her case?
2. Do you agree with Judge Pappas’ ruling? Discuss.
3. What is the Brunner test?
4. Detail the history of discharging student debt.
5. Were Judge Easterbrook and Judge Pappas the first to criticize the Brunner test?
6. Are there any tax implications to the debtor if the student loan is discharged? Explain.

Source:

Bernard, T.S. (2015). Judges Rebuke Limits on Wiping Out Student Loan Debt. The New York Times, July 17 (Retrievable online  here.)

cdn-media_nationaljournal_com



Well-Oiled Machine? Well – Maybe Not!

United and Continental closed their merger in 2010 and created what was then the world’s largest airline. After nearly 5 years, executives are still working to integrate United Continental Holdings into a single company—and struggling with some high-profile operational and customer service problems.

Questions:
1. What types of customer service and employee problems have plagued the company this year?
2. What amount of annual savings is United trying to extract from the company?
3. What percentage of United’s flights have been delayed at least 15 minutes in June? How does that compare to other carriers? Is there any relationship to this and the cost cutting measures?
4. What other risks to profitability does United face?
5. Typically, how long does it take a new venture to work out the kinks of acquiring another company? Can you hypothesize why United is taking longer?

Source:
Bachman, J. and M. Sasso. (2015). The Making of United’s Summer From Airline Hell. Bloomberg Business.com, July 17 (Retrievable online at http://www.bloomberg.com/news/articles/2015-07-17/the-making-of-united-s-summer-from-airline-hell).



The Reverse – Upside down Prosecution!

Despite the fact that bank officials uncovered a fraud, fired its mastermind, investigated and reported it to regulators, and then provided New York State prosecutors with over 900,000 pages of documents, a tiny Chinatown bank, Abacus Federal Savings Bank, was under put under indictment by a grand jury in New York State Supreme Court and endured a five and a half year saga leading to a recent court case.

Questions:
1. What were the charges against the bank and its employees?
2. Although the bank was exonerated, what were the costs to the tiny bank?
3. What was the bank’s track record with mortgages during the sub-prime crisis? Did Fannie Mae lose money?
4. The Abacus indictment was the Manhattan District Attorney office’s first against a bank since what famed 1991 prosecution? Summarize briefly what this previous case was about.

Source:
Morgenson, G. (2015). A Tiny Bank’s Surreal Trip Through a Fraud Prosecution. The New York Times, July 17 (Retrievable online at http://www.nytimes.com/2015/07/19/business/a-tiny-banks-surreal-trip-through-a-fraud-prosecution.html?hp&action=click&pgtype=Homepage&module=second-column-region&region=top-news&WT.nav=top-news&_r=0)

bizzaro



The Question of Undue Hardship

The bankruptcy case of Janet Roth stirred a debate over the rigidity of the “undue hardship” standard in discharging student loans. This year, President Obama instructed several governmental agencies to review, by Oct. 1, whether the treatment of student loans in bankruptcy should be altered.

Questions:
1. How did Ms. Roth prepare for her case?
2. Do you agree with Judge Pappas’ ruling? Discuss.
3. What is the Brunner test?
4. Detail the history of discharging student debt regulations.
5. Were Judge Easterbrook and Judge Pappas the first to criticize the Brunner test?
6. Are there any tax implications to the debtor if the student loan is discharged? Explain.

Source:

Bernard, T.S. (2015). Judges Rebuke Limits on Wiping Out Student Loan Debt. The New York Times, July 17 (Retrievable online at http://www.nytimes.com/2015/07/18/your-money/student-loans/judges-rebuke-limits-on-wiping-out-student-loan-debt.html?&moduleDetail=section-news-0&action=click&contentCollection=Your%20Money&region=Footer&module=MoreInSection&version=WhatsNext&contentID=WhatsNext&configSection=
article&isLoggedIn=false&pgtype=article)

cdn-media_nationaljournal_com



An Expose on Financial Mismanagement – Casino Money Monte?

In this extended article, the Washington Post looks at “opportunity gamed away” in Tunica County, Mississippi. The article highlights the sad fact that “somebody born today in Mississippi, Alabama, Louisiana, Georgia or South Carolina is far more likely than someone born elsewhere in the United States to attend a poorer school, drop out before high school, work a low-paying job, struggle with debt, go to prison and die young, according to national health, labor and education statistics.”

Questions:

1.How does the current poverty rate in Tunica County compare with the pre-casino rate? How does the current poverty rate in Tunica County compare with the rest of the country?
2. The article quoted one Tunica County resident as saying that the casino boom was a “success story for those in the right social circle.” Briefly discuss what she meant.
3. What was the boom money used for? What does the article suggest should have been done?
4. What fact about the financial mismanagement surprised you most?
5. According to the article, what has changed between the Tunica highlighted on 60 minutes in 1985 and the strike-it-rich Tunica over the last 30 years?

Source:

Harlan, C. (2015). Opportunity Gamed Away. The Washington Post, July 11 (Retrievable online at http://www.washingtonpost.com/sf/business/2015/07/11/an-opportunity-gamed-away/?hpid=z4)

Mardis Jones, the county housing coordinator, in a rundown home in the Old Sub neighborhood. More often than not, he must tell those who have applied for aid that they must wait for years.

Mardis Jones, the county housing coordinator, in a rundown home in the Old Sub neighborhood. More often than not, he must tell those who have applied for aid that they must wait for years.



Bye-bye Loopholes! You will be missed!

Keep an eye out for three retirement loopholes that the government may close shortly. They have become increasingly popular as financial advisers have learned how to exploit kinks in the law.

Questions:
1. Who benefits from the Back-door Roth IRA conversions and how does this work?
2. What bothers lawmakers about “the stretch IRA?”
3. Who benefits from the agressive social security strategies mentioned and how does this work?
4. How soon are these loopholes expected to be closed?

Source:
Weston, L. (2015). 3 Retirement Loopholes That Are Likely to Close. CNN Money, June 30 (Retrievable online at http://time.com/money/3941695/retirement-loopholes/)



Innovation, Price Fixing, or Rotten Apples?

Recently, a federal appeals court upheld a ruling whereby Apple was determined to be the leader of an industrywide conspiracy among book publishers. Their goal was to raise prices of digital books.

Questions:
1. When was the original case brought?
2. What were the damaging words in the case and who are these attributed to?
3. What division of the Justice Department prosecutes this type of case?
4. What does the terminology “horizontal conspiracy” mean?

Source:
Chen, B.X. (2015) Ruling That Apple Led E-Book Pricing Conspiracy Is Upheld. The New York Times, June 30 (Retrievable online at http://www.nytimes.com/2015/07/01/technology/ruling-that-apple-led-e-book-pricing-conspiracy-is-upheld.html?module=WatchingPortal&region=c-column-middle-span-region&pgType=Homepage&action=click&mediaId=none&state=standard&contentPlacement=1&version=internal&contentCollection=www.nytimes.com&contentId=http%3A%2F%2Fwww.nytimes.com%2F2015%2F07%2F01%2Ftechnology%2Fruling-that-apple-led-e-book-pricing-conspiracy-is-upheld.html&eventName=Watching-article-click&_r=1)

apple