Ethics: How do you feel when a company you owned is fined $75 million?

Medtronic (MDT) is paying a $75 million fine to settle a Medicare fraud and abuse claim against Kyphon Inc., which it acquired last November from me and a bunch of other happy Kyphon shareholders.

Of course, Medtronic didn’t commit the fraud and abuse, so its integrity can’t be challenged because of the claim, which it knew about when it bought the company.

And none of us outside shareholders were involved in the fraud and abuse, but we sure made a lot of money when Medtronic acquired Kyphon. We might have made a bit more if the company hadn’t been the subject of a fraud and abuse claim at the time of the acquisition.

So, how do I feel about having made money on a stock when the company wasn’t operating ethically?

Yucky. Disgusted. And frustrated that some of the people who were running a successful company like Kyphon felt they had to be unethical or didn’t care if they were.

As a ethical businessman and a taxpayer, I’m glad that a whistle blower had the integrity and courage to alert the government about the fraud and abuse and that whoever was involved in committing the crime will live with their personal shame for a long time.

 

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