Although it is not the intent of this text to teach ethics as such, it would appear in Gail Rosenberg’s best interest to come forward with the knowledge she had. Up to this point she had been more of an observer than a participant. However by continuing to remain quiet, she would become a party to a coverup of violations of federal security law. She might not only be barred from Wall Street dealings in the future, but could face possible criminal actions. If the people at Salomon Brothers were unwilling to listen to her, she could report the illegal activity to the Federal Reserve, which was in charge of conducting the auctions, or the Securities and Exchange Commission, which had regulatory power over Salomon Brothers and other investment bankers.
When the scandal did eventually break in the summer of 1991, all those involved were fired. Warren Buffet took over as interim chairman of the board at Salomon Brothers. One of his first statements was, “If you lose money for the firm by bad decisions, I will be very understanding. If you lose reputation for the firm, I will be ruthless.”