Combating Cheating in the Classroom

Online resources students may use for cheating

Have you ever heard of websites such as Course Hero, Quizlet, or Koofers? If you have, you may know that while these websites can provide some advantages for honest students, they also provide an opportunity for some students to cheat. A recent presentation by a professor at Brigham Young University (BYU) highlighted several concerns about these study websites. After searching the websites, thousands of assignments, quizzes, and exams were discovered posted on the various sites. While it may be okay to post student notes, flash cards, or even class slides depending on professors’ instructions, posting assignments, quizzes, and exams is likely a violation of copyright laws.

$550 Million Settlement for Goldman Sachs

Goldman Sachs will settle with the SEC for $550 million over charges of fraud related to Goldman's sale of subprime mortgage products.  Goldman neither confirmed nor denied wrongdoing, but "acknowledged that its marketing materials for the subprime product contained incomplete information."  The SEC seems pretty proud of the settlement, noting:

The Next Financial Crisis

Harvard economist Jeremy Stein predicts that the next financial crisis will come from a bubble in green energy industry.  Sound familiar?

Enron Update

The WSJ reports that the Supreme Court will consider the appeal of Jeffrey Skilling, former President, CEO, and COO of Enron:

The justices agreed to look at two issues in the Skilling appeal. Both could have broader repercussions in criminal cases, say legal observers. One has to do with the government's contention that Mr. Skilling violated his legal obligation of providing "honest services" to Enron shareholders because he lied to the public about the company's financial condition. Enron collapsed into bankruptcy in December 2001. The second issue involves Mr. Skilling's claim that he wasn't able to get a fair trial in Houston, Enron's headquarters, because of anger in the community over the company's collapse.

I find it curious that eight years after Enron's collapse we still see some ambiguity regarding the legal consequences of the Enron scandal.  If nothing else, this highlights the increased opportunity that managers have to get away with fraud, as financial statement fraud appears to be a difficult crime to prove/prosecute.

Another bubble candidate

In addition to the green energy industry, I believe that the health care industry has potential to develop into our next bubble. The attitude toward the health care industry is similar in many ways to the pre-bubble attitude toward the housing industry. Similar to housing (and green energy), health care is being subjected to a great deal of government tinkering, with the objective of making health care affordable for all (note: I will save my political views on health care reform for another post--in this post I simply wish to point out the similarities between the pre-bubble housing industry and the current health care industry). In addition, many individuals believe that the demand for health care will continue to either increase or remain constant, similar to the "house prices will always increase" belief. Although differences between the two industries (e.g. a lower degree of leverage in health care) may limit the severity of a health care bubble in comparison to the housing bubble, I still believe that health care is a viable candidate for our next bubble.

The next bubble...

After two major bubbles popping in our economy in the last decade (the internet and real estate bubbles), I've wondered where the next bubble will form and if the pop will be as dramatic as the first two. Each bubble grows as investors jump on board in the boom times but, eventually, the market has a reality check and the bubble pops. In the boom times, fraud perpetrators have abundant opportunities to create a facade that investors are happy to finance. Then, when the reality check comes, the facade is revealed and rampant fraud is revealed.

I was reading about the proposed legislation for green energy and I'm going to be watching for a bubble in this area of the economy. Along with the bubble, I'm curious to see how much fraud forms among the companies that are jumping on board to make their millions while the government is blowing hot air into that part of the economy. Don't get me wrong, I would love to see us get away from foreign oil and put the middle east out of business but I'm also pretty sure that whenever the government is blowing hot air that a bubble will form and fraud perpetrators will come running to get their share.