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BUSINESS ETHICS

A&O Life Funds is a business firm shut down by the regulators in 2007 due to its misconduct.  The business aim was buying life insurance policies from insured individuals at a price lesser than the face value and later collects the benefits of the insurance policy after the death of people. Investors received part of the funds collected from the insurance firms as their profit. A&O Life Funds violated ethical procedures of business firms (The Associated Press, 2011).

The founders of this business represented it as risk free in order to attract more investors. They failed to reveal business risks associated to the investors before investment. This means that the founders denied investors full disclosure of their contract details. The firm founders also misrepresented the size of their business together with record of success. These are major business features that the world, which includes the government, investors and other stakeholders, received wrong and false details regarding them.

Set rules and regulations that govern businesses in the US require a business to give true and fair value of their books of accounts. Books of account indicate financial size of a business and profits made in a financial year. The founders of this firm denied investors, government and other stakeholders the access to true value of the business. This act was against the law and regulation set to govern business operations.

According to (The Associated Press, 2011) government was able to identify marketing materials that the company founders lied about their usage. The government believes the purpose of these materials was to excite the sale’s agents therefore increasing the firm’s sales. Investors of this company made losses due to poor management. The founders did not keep insurance premiums in force but used profits made for their own usage. This fraud committed by the founders was a major crime that raised attention and the regulators found the founders corrupt therefore legible for prosecution.

References

The Associated Press. (2011, 03 14). Texas man charged in $100 million fraud case goes on trial in federal court in Virginia. Retrieved 04 14, 2016, from The Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2011/03/14/AR2011031404103.html

 

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