In a publicly traded company, it can be difficult at times for those in management roles to act ethically by putting the interests of shareholders ahead of their own. While ethics should play an important role in the decision-making process of any organization, history has shown that ethical decisions can be hard to make. This paper will look at an example of ethics in a publicly traded organization by looking at the lack of disclosure by top-executives at Bank of America due to self-interest.

Whether an organization is private or public, it is important to take in both the ethical and legal implications of any actions. In a publicly traded company, management must be diligent in putting the interests of shareholders above their own gains. This can be a tough choice when making financial decisions that impact not only the stock price; but management’s yearly bonus. Disclosure is another area where ethics plays a part. While full disclosure may negatively impact the value of the stock, management must consider the ethical responsibility to the public.

In the case of Bank of America, CEO Ken Lewis is being accused by state prosecutors of not fully disclosing dealings with the federal regulators to shareholders. According to the New York Attorney General Andrew Cuomo, Lewis met with then-Treasury Secretary Henry Paulson to talk about the possible failure of Merrill Lynch. In these meetings, Paulson indicated to Lewis that if Bank of America were to back out of the merger with Merrill Lynch, federal regulators would have him removed from his position as CEO, along with other top-executives. Paulson agrees that comments were made to Lewis as federal regulators believed it would have been a breach of contract for Bank of America to back out of the deal. Because these statements were made in private conversation no documents were disclosed to shareholders or the SEC.