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Created: January 15, 2003
Latest Update: January 15, 2003
jeannecurran@habermas.org
takata@uwp.edu

A Case of Alleged White Collar Crime

Site Copyright: Jeanne Curran and Susan R. Takata and Individual Authors, January 2003..
"Fair use" encouraged.

This essay is based on Analyst and Her Husband Under ScrutinyBy Gretchen Morgenson. New York Times. At p. C 1. Backup.

"Holly B. Becker, a Lehman Brothers stock analyst, has reportedly been notified she may face enforcement action."

Upclose look at what white collar crime is like at the investigation stage. I posted this for you because I was taken aback by the lovely photo of the young woman involved. Could have been any one of us. And then I thought how odd it seems that someone under investigation of financial crime could look just like one of us. No tell-tale horns or tails, no scroungy, harsh looks. Perhaps this is one reason we've had such difficulty coming to terms with Enron and its aftermath. Everybody was "doing it," even people like us.

The problem being investigated by the Securities Exchange Commission is that of insider trading. Lehman Brothers work product, or reports of their analysts recommendations on the purchase of internet stock and the reasons for those recommendations belong to Lehman's and are not public information to which others are entitled. But Ms. Becker was married to Mr. Zimmerman, and a computer with access to those reports was installed by Lehman Brothers in their shared apartment in Manhattan.

If Ms. Becker gave information on the Lehman Bros. reports to her husband, that would be a breach of fiduciary duty. In other words she didn't keep her promise not to tell anyone about her work product. If Mr. Zimmerman used such information, whether he got it from Ms. Becker, or from the computer in their shared apartment, "he could be held criminally liable for misappropriating material and nonpublic information for his own use, securities lawyers said."

Notice the difficulty in determining whether the information was exchanged, and whether or not Mr. Zimmerman acted on that information. Notice how much more complicated this is than a simple shoplifting case. Notice the importance of measurement. What is being used in the investigation? Dates that ascertain when research reports were made public, and dates of stock purchases or sales that could have been related to the data in the research reports.

Discussion Questions:

1. Quinney says that crime is socially defined. That makes sense in that if I have lots of property and I want to protect it, I vote to make your taking of my property a crime, burglary or theft. And I get to vote because I have property and status and got myself elected to the legislature or have friends that have status and power and have friends in the legislature. So I have something to do with defining burglary and robbery as a crime. Of course, I could also use my status and power to convince the legislature to provide social programs that would reduce the income gap, relieve poverty and provide education. Then I wouldn't have to worry about defining burglary and robbery because we might eliminate the need to steal. And then I wouldn't have to make so many laws about prison, because there wouldn't be so many candidates for prison. So how I choose to define the problem has a lot to do with how the problem is handled.

   Now, that's crime as we're used to thinking of it. Does that fit the case of Ms. Becker and Mr. Zimmerman?

   Consider their relationship to those who are in the legislatures making up the laws that define the crimes. Consider their status and power. Consider where they went to school and who their friends are likely to be. Consider the relative ease of defining stolen property as compared to "misappropriating" information.

2. Can you conceptually link this problem in white collar crime to "knowingness?"

   Consider that Ms. Becker could have mumbled something in her sleep. Could Mr. Zimmerman interpret that at his will without being said to have "misappropriated" anything?

   Consider that Ms. Becker and Mr. Zimmerman, in the course of their day, exchange many ideas, and that they both come to the same conclusions, since they are in very similar financial fields?

   Consider that what we "know" is colored by many perspectives and that two people, married, must share many of those perspectives. What does all this tell you about measurement?

3. How do you feel about the difficulties and complexities of this case? Do you have the same faith in our ability to judge fairly that you would have in a shoplifting case?

4. How could you relate this case to a case of cheating in school? Do you think there might be difficulties of meaurement in school cheating?

5. How would you feel if Ms. Becker and Mr. Zimmerman were your friends and neighbors? Consider empathy. Do you feel similar empathy for those who have served time in prison? For those from the lower classes? For schoolmates you don't like? Do you think your feelings matter? To the people being investigated? To the system of justice?

6. Is justice neutral?