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ETH501

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ETH501
Briefly describe the Adelphia Communications scandal.
Adelphia is a Delaware corporation headquartered in Coudersport, Pennsylvania. Adelphia owns, operates, and manages cable television systems and other related telecommunications businesses. Adelphia issues Class A shares of common stock, which are registered with the Commission pursuant to of the Exchange Act, and Class B shares of common stock, which have ten times the voting power of Class A shares and which have been held almost exclusively, directly or indirectly, by J. Riga’s or members of his family. Thompson, L. M. Jr. (2005). Shares of Adelphia 's Class A stock were listed on NASDAQ until June 3, 2002. Adelphia filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code on June 25, 2002. In March 2002, Adelphia 's Board of Directors appointed a Special Committee to investigate business relationships between Adelphia and affiliates of the Riga’s family. Thompson, L. M. Jr. (2005).
J. Riga’s is 77 years old and resides in Coudersport, Pennsylvania. He was Adelphia 's founder and until May 15, 2002, were its CEO and Chairman of its Board. J. Riga’s and members of his immediate family held five of Adelphia 's nine Board of Director positions, and exercised voting control of Adelphia shares. On May 15, 2002, J. Riga’s resigned from his position as CEO and Chairman of Adelphia, May 23, 2002, resigned his position as a director of Adelphia, pursuant to a request by the Special Committee. Thompson, L. M. Jr. (2005).
Identify and discuss two key ethical problems raised by the Adelphia Communications case. Main Key ethical problems raised by the Adelphia Communications case:
During the period of the conduct alleged, Adelphia and the Riga’s , including those that are in businesses unrelated to cable systems, participated jointly in a cash management system operated by Adelphia . Thompson, L. M. Jr. (2005). Adelphia, its subsidiaries, and the Riga’s Entities all deposited all of their cash



References: Neumunster, L. (2005), Adelphia VP pleads guilty; Burlap, K., Hanne, I.D., & Stuart. (2009) case study and challenges for jury false financial entry. Thompson, L. M. Jr. (2005). Sarbanes-Oxley means opportunities and challenges for Companies and IROs. The CPA Journal. 75(9), 14-15.

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