Role of Technology in Corporate and Social

Role of Technology in Corporate and Social Responsibility

Insider trading. The insider trading case that has become most prominent is that against Raj Rajaratnam who ran the hedgefund Galleon Group, and was charged along with his co-defendant, Danielle Chiesi, a former consultant with New Castle Funds, LLC ("Insider Trading," 2010). Rajaratnam was convicted of 14 counts of insider trading, which makes this case the largest scheme concocted by a hedge fund ("Insider Trading," 2010). Rajaratnam's sentence was 11 years in prison accompanied by a $10 million fine ("Insider Trading," 2010). Rajaratnam was part of a "triangle of trust" that functioned as a deliberately corrupt business model in which inside information is fed through networks of experts to traders within various companies ("Insider Trading," 2010). Along with five others, Rajaratnam worked with a network of consultants and insiders to net in excess of $20 million between the years 2006 to 2009 ("Insider Trading," 2010). Rajaratnam's actions -- along with those of his colleagues -- qualify as deeds of misappropriation as defined by the insider trading case United States v. O'Hagan 521 U.S. 642 (1997) ("Insider Trading," 2010). The court considers corporate information to be company property, and specifically states that, "A company's confidential information...qualifies as property to which the company has a right of exclusive use ("Insider Trading," 2010). The undisclosed misappropriation of such information in violation of a fiduciary duty...constitutes fraud akin to embezzlement -- the fraudulent appropriation to one's own use of the money or goods entrusted to one's care by another ("Insider Trading," 2010)." Classical theory of insider trading liability §10(b) and Rule 10b-5 stipulate that material, nonpublic information must be the basis of trades made by a corporate trader in his corporation's securities ("Insider Trading," 2010). When a corporate trader makes trades based on material, non-public information, a "deceptive device" as under §10(b) has been used ("Insider Trading," 2010). More so, because there is professional confidence and trust relationship between a corporation's shareholders and the insiders who gain access to confidential information because of their employment with the corporation ("Insider Trading," 2010). There is a fiduciary "duty to disclose [or abstain from trading]" as a result of that relationship in order to avoid taking "unfair advantage of & #8230;uninformed…stockholders" Id., at 228-229. Under the misappropriation theory, fraud is committed when an individual misappropriates confidential information for securities trading purposes in what amounts to a breach of duty that is owed to source of the information ("Supreme Court," 1997). When duty of loyalty and duty of confidentially are breeched in this manner, the principal is defrauded of exclusive use of that information by the fiduciary's self-serving and undisclosed use of that information to buy or sell securities ("Supreme Court," 1997). The court reasoned that the two theories complement each other and together address attempts to capitalize on nonpublic information when selling or buying securities ("Supreme Court," 1997). The classical theory focuses on the breach of duty to shareholders with whom the corporate insider normally transacts business ("Supreme Court," 1997). The misappropriations theory prohibits trading based on nonpublic, material information by a corporate outsider in a breach of duty that is owed to the source of the information rather than to a trading party ("Supreme Court," 1997). Clearly, the misappropriations theory is intended to protect against abuses by corporate outsiders who gain access to confidential information, but who do not owe a fiduciary duty or other duty to the shareholders of a corporation ("Supreme Court," 1997). In further support of the deceptive devices aspect of the court's interpretation, the conviction of Rajat K. Gupta provides evidence of the duplicitous relationship of Rajaratnam to those who could reasonably expect him to conduct business according to his fiduciary duty. The court charged Gupta, who is a former director of Goldman Sachs and Procter & Gamble, with one count of conspiracy to commit securities fraud and actual counts of securities fraud ("Angwin," 2010). Specifically, Gupta leaked Goldman Sachs corporate secrets to Rajaratnam, such as the advance information that Warren Buffet intended to make $5 billion investment in Goldman Sachs ("Angwin," 2010). The Galleon investigation continues as the tangled tendrils of the illegal hedge fund business model are unraveled by investigators like Preet Bhara ("Angwin," 2010).

Consumer privacy issues. Privacy legislation must be the basis for consumer privacy solutions ("Sterns," 2011). Neither consumer self-help nor industry self-regulation will result in actual protections for a number of important reasons ("Sterns," 2011). Through my discussion of proposed bills on consumer privacy, I will illustrate what I believe to be the inadequacy of even well-intentioned legislation to ensure relevant and effective safeguards ("Sterns," 2011). That said, I believe that legislation is necessary and that increased specificity of regulatory language coupled with rulemaking that keeps pace with technological change is required if U.S. citizens are going to prevent their personally identifiable information from becoming commoditized ("Insider Trading," 2010). On April 13, 2011, Republican Representative Cliff Stearns from Florida introduced the Consumer Privacy Protection Act of 2011 ("Sterns," 2011). The act is intended to "protect and enhance consumer privacy" across online and offline contexts; it seeks to accomplish these safeguards through the imposition of requirements for consumer notice and consumer choice regarding the collection and use of personally identifiable information ("Sterns," 2011). Unfortunately, from this author's perspective, the bill is overly broad as it would only apply when an entity would access and use personal information of more than 5,000 consumers during a 12-month period ("Sterns," 2011). Further, as written, the bill would exclude governmental agencies [the U.S. Postal Service comes to mind], and "providers of professional services obligated by rules of ethics and confidentiality requirements and data processing outsourcing entities ("Sterns," 2011)." These exclusions substantially weaken the impact the law would have ("Sterns," 2011). Further, although the language in the bill is set up to offer consumers the opportunity to prevent disclosure or sale of their information, this provision must be renewed by each consumer every five years ("Sterns," 2011). The violations of the Act would be considered unfair or deceptive acts or practices and could incur a $500,000 fine ("Sterns," 2011). In what seems like an attempt to knock the legs out from underneath the Act, participants in self-regulatory programs would be exempt from civil penalties for a period of five years ("Sterns," 2011). Last, the Act provides that entities complying with other federal privacy laws are considered to be in compliance with the Act ("Sterns," 2011). In a more focused effort to protect consumer privacy, U.S. Senators Al Franken, Democrat of Minnesota and chairman of the Judiciary Subcommittee on Privacy, Technology and the Law, and Richard Blumenthal, Democrat of Connecticut, introduced legislation -- the Location Privacy Protection Act -- to restrict mobile device application developers and companies like Apple and Google, from sharing geo-location information about consumers with third parties without obtaining the express consent of those consumers ("Franken," 2011). One purpose of the proposed legislation is close loopholes in current federal law ("Franken," 2011). An ancillary purpose is to prevent geo-location information from getting into the wrong hands where very real harm can come to the consumer -- as in the case of domestic violence ("Franken," 2011). The fundamental issue is that personal information is being sold and used without the express permission of the owners of that confidential and often personally identifiable information -- and this lucrative business that has developed from the widespread access to personal information occurs without consumers total awareness or complete understanding (Angwin, 2010). Ashley Hayes-Beaty is a good example (Angwin, 2010). According to a Wall Street Journal article, Hayes-Beaty's computer holds a little file that collects data about her and sells it for one tenth of a penny (Angwin, 2010). Basic math indicates that this process is replicated hundreds upon thousands of times in order to generate profits for the entities involved with the data collection and sales (Angwin, 2010). The marketing company that sells her data, $1 per thousand, can segment the data right down to a single person. The company that buys Hayes-Beaty's data is BlueKai, and every day, BlueKai instantly sells approximately 50 million pieces of information like Hayes-Beaty's most viewed movies. BlueKai CEO, Omar Tawakol told the Wall Street Journal that, "It is a sea change in the way the industry works. Advertisers want to buy access to people, not Web pages." And so it is that casual use of the internet delivers a an enormous -- and apparently commercially useful -- amount of information about users through pervasive and intrusive methods, of which only a few people in digitally-based industry vanguards are aware (Verrier, 2010). Where people once thought they browsed the internet to follow their own interests, passions, and task, now advertisers follow consumers wherever they go on the internet in order to place very specific advertising messages before them (Verrier, 2010). This lucrative commercial industry that morphs every few months to maximize its profit potential is not about to self-regulate, and it is not possible for average consumers conducting their quotidian online business to monitor and manage the many ways that they are being exploited (Verrier, 2010). In addition, purveyors of data have shown themselves to be antagonistic toward regulation (Verrier, 2010). Currently, there are no legal restrictions on how data that has been sold can be used (Verrier, 2010).

Free expression or copyright piracy. Intellectual property is intangible proprietary information. The word proprietary is key in this definition as it signals ownership. There are laws governing creative properties, such as literature, music, art, films, architectural design and the like. However, many of these regulations are difficult to enforce, particularly when violators are located outside the boundaries in which the law is applicable (Verrier, 2010). Global enterprise is replete with challenges, not the least of which is the watchdog function that must be employed to safeguard consumers and the legal rights of entities (Verrier, 2010). The Consumer Safety Protection Commission must shut down imports of children's toys that are coated with lead-based paints. In much the same manner, regulatory bodies in the U.S. must be able to block the ability of foreign entities to establish domain names that basically pirate the intellectual property of U.S. firms (Verrier, 2010). Within the arts industries, an idea is protected. For instance, the plot of a novel will have some unique characteristics that form the core idea or concept around which the body of work is written. This plot sequence and story concept or idea is protected, in its specificity. This is not to say that another novel cannot be about the same topic or even have parallel situations, but the specific plot belongs to the author and the publishers and any other party that has been granted legal rights to that specific plot. Unfortunately, the Internet has eroded this sense of proprietary rights, and because it is so easy to do so, copies are made of literally everything without proper attribution (Verrier, 2010). And because there are so many examples of shared content that is legal, through commons agreements and such, Internet users assume that the rules have been eased, and that everyone is sharing information with proper citation (Verrier, 2010). The bottom line is that the rights to the intellectual property belong to the creator, not to whomever can access and distribute the proprietary property. Indie filmmakers may need to partner with big Hollywood studios in order to assemble the clout to take legal action against those who pirate their work (Verrier, 2010). The recording industry had to do just that -- and had to sue violators -- who pirated their music in order to begin to impress consumers that they meant business. The suits were brought against violators in very visible and promoted law suits that were intended to drive home the message of the music industry to any would-be music pirates sitting on the fence -- violations would not be tolerated (Verrier, 2010). Uploading vids is a clear infringement of intellectual property -- and if it were occurring only in instances where companies with deep pockets were involved, it most certainly would not continue.