Eliot Spitzer Case * He investigated into the IB and mutual fund industry * All business leaders should rethink the way they view and treat their clients and shareholders (in what he calls fiduciary duty) * Society has becoming more “comfortable” with improper behavior (dissipation of standards) * The internet is making the fiduciary challenge even harder as it is distant and atomized * There is a conflict of interests between managers and consumers/shareholders * How you instill fiduciary responsibility in people and organizations is the key question…. (education? Oath?) * Regulators need to do a better job at mediating conflicts of interest * Mutual fund companies are an example of where competitive markets failed to function efficiently * Ethics need to come from above (top managers, middle managers) * The power within the corporation is being used to shift wealth towards management (CEO compensation to the average worker has risen tremendously) * Corporate governance: independent vs inside board members as a mean to control conflicts of interest * Government needs to play a role in protecting free markets – anti trust enforcement. If markets were perfect, mutual funds’ fees would be much lower * Regulators need to be more active: jail time for CEO’s would send a message across the market and public embarassement (newspaper headlines) would be a big motivator. * In IB the bank’s business model was flawed and the regulatory entities that were supposed to catch illegal practices didn’t. * There is need to address CEO compensation. There is a difference between one that uses their own equity to create its own wealth (Bill Gates) and one that is taking for itself wealth that should have gonne to shareholders * Somehow we created this managerial class apart from equity stakeholders that has