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Chapter 25: Problem 31

Which of the following statements is the most accurate? (LO8) a) Corporate fraud invariably involves some form of illegal financial manipulation. b) Corporate fraud is confined almost entirely to the financial services industry. c) Pfizer, which paid a \(\$ 2.3\) billion fine for selling a drug for a use that had not been approved by the Federal Drug Administration, was guilty of corporate fraud. d) Because of the threat of heavy fines and long prison sentences, corporate fraud is no longer a serious problem.

Short Answer

Expert verified
The most accurate statement is (c) Pfizer, which paid a \(\$ 2.3\) billion fine for selling a drug for a use that had not been approved by the Federal Drug Administration, was guilty of corporate fraud.

Step by step solution

01

Corporate fraud refers to dishonest activities, typically involving financial activities, by people within a corporation or an organization to deceive others for personal or business advantage. It could involve illegal financial manipulation, false financial reporting, misuse of company resources, or violation of regulations. #Step 2: Evaluate statement a#

a) Corporate fraud invariably involves some form of illegal financial manipulation. While many corporate fraud cases involve some form of illegal financial manipulation, it is not the only type of fraud that can occur. Corporate fraud can also involve other unethical activities like corruption, conflicts of interest, or misuse of company resources. So, this statement is partially correct but might not be the most accurate among all options. #Step 3: Evaluate statement b#
02

b) Corporate fraud is confined almost entirely to the financial services industry. Corporate fraud is not limited to the financial services industry. It can occur in any industry where people are in a position to manipulate information or resources for personal or business advantage. Therefore, this statement is not accurate. #Step 4: Evaluate statement c#

c) Pfizer, which paid a \(\$ 2.3\) billion fine for selling a drug for a use that had not been approved by the Federal Drug Administration, was guilty of corporate fraud. In this case, Pfizer was indeed found guilty of corporate fraud by trying to sell a drug for an off-label use that had not been approved by the Federal Drug Administration. This is an example of an unethical activity to deceive others for a business advantage. So, this statement is accurate. #Step 5: Evaluate statement d#
03

d) Because of the threat of heavy fines and long prison sentences, corporate fraud is no longer a serious problem. While heavy fines and prison sentences can act as deterrents to corporate fraud, it is still a serious problem, as people may continue to find ways to deceive others for personal or business advantage. Additionally, not all cases of fraud are detected and punished. Therefore, this statement is not accurate. #Step 6: Choose the most accurate statement#

Based on the evaluation of each statement, the most accurate statement is: c) Pfizer, which paid a \(\$ 2.3\) billion fine for selling a drug for a use that had not been approved by the Federal Drug Administration, was guilty of corporate fraud.

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