Friday, June 16, 2006

Ben Stein gives heartfelt speech on ethics to Boston Security Analysts Society

Aside from a few jokes, I wasn't sure what to expect from a keynote speech to the Boston Security Analysts Society (BSAS) by Ben Stein, who was billed as an author, actor, lawyer, humorist, and observer. Stein is best-known for his role in the movie Ferris Bueller's Day Off.

He surprised my modest expectations by delivering a heartfelt speech about ethics in American business. He focused on a case study -- the example of Richard Kinder of Kinder Morgan attempting to take the firm private.

This is not a philanthropic act, said Stein. Why would Kinder try to buy the firm unless he knows he's underpaying for Kinder Morgan's assets? There's a problem: As chairman and CEO, Kinder has an ethical duty to shareholders to put their interests first. But a management buyout, by definition, must put management first. Indeed, management got fantastically rich in every buyout that Stein covered back when he wrote for

Stein draws these lessons from management buyouts:
  1. It'll be possible to make real money by arbitraging this deal
  2. There's a fantastic amount of value to be derived from controlling both sides of a deal, although it's unethical
  3. Superior knowledge is a great thing, whether it's acquired ethically or not
Stein also spoke about his work with the Tragedy Assistance Program for Survivors, which he wrote about recently for American Spectator. He concluded his speech by urging BSAS members to help make more secure the lives of widows and others left behind by the war on terrorism.

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Blogger SusanW said...

Stein also spoke against the backdating of stock options.

I just noticed that the CFA Institute is also taking a stand against that (

10:29 AM  

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