Read the short case below and answer the questions that follow.

A large asset management firm created a new mutual fund called the No Loss Fund in 2005. The firm began to market the fund looking for large companies that would offer the fund to their employees. One company, Wal-Mart, with primarily low-income employees agreed to make the No Loss Fund available to its employees. For Wal-Mart, the fund was attractive because it promised the possibility of financial gain with little to no risk of loss. Employees investing in the No Loss Fund would be able to grow their retirement, albeit at a slower rate than other investments, without the usual risk of loss.

In the spring of 2009, Margaret Cummings was managing the wealth management division of a major US bank. When the bank suffered unusual losses due to risky investments, Ms. Cummings made the decision to reimburse the division’s clients for their losses. She made this decision without consulting the CEO or the Board of Directors. Subsequently, she was fired from the bank.

Ms. Cummings was hired in the summer of 2009 to manage the No Loss Fund. Shortly after taking control of the fund, Ms. Cummings came to learn that the fund investment team had made some poor decisions and the fund was losing money. The No Loss Fund had lost all of its profits and 15% of its initial capital. Thousands of Wal-Mart employees were at risk of losing a large portion of their investment and Ms. Cummings felt personally responsible.

1. Identify and examine 3 ethical issues in this case. In your answer, identify each issue, describe the stakeholder that was owed a duty, the organization or person who violated that duty, and the specific nature of the violation (e.g., failure to honor a warranty).

2. Margaret Cummings is in the midst of a moral dilemma. Explain what a moral dilemma is and how Ms. Cummings’ situation constitutes a moral dilemma.

3. Ms. Cummings is considering reimbursing Wal-Mart employees for their loss. What would you recommend she do? Make your recommendation from an ethical perspective. Your answer should consider all of the major stakeholders affected by the decision and explain how the chosen course of action is the best ethical response to the situation.

Answer rating: 100% (QA)

1 The first instance of violation WalMart had a duty to evaluate the proposal as it was related to money earned by hard work of its employees The empl... View the full answer