Updated federal sentencing guidelines, wary investors and a change in corporate culture leave little room for companies to tolerate misdeeds by top executives.

"It's called The New York Times test," said Keith Darcy, executive director of the Massachusetts-based Ethics and Compliance Officer Association. "What we really need to do is to take a look at our business practices and ask ourselves the question, 'If this showed up in the front page of the newspaper, what would it look like to other people?'"

WellPoint leaders asked Colby, a highly regarded chief financial officer, to resign May 30 over an unspecified violation of the company's employee conduct code. They have termed it a "nonbusiness-related violation" and declined to elaborate, other than to say it involved nothing illegal and was not related to the company's financial condition.

The resignation came five days after a California woman sued Colby, saying he had reneged on a promise to transfer a title to a house to her. The Indianapolis Star reported the woman, Rita DiCarlo, had lived in the house since January 2005 and that Colby had introduced her to WellPoint investors as his wife.

He also is embroiled in divorce proceedings with another woman in California and currently lives with a third woman in Indianapolis who uses his last name.

Colby is the latest in a string of executives to fall from grace. In early May, Time Warner Inc. forced out HBO chief executive Chris Albrecht, who was charged with battery in an alleged assault on his girlfriend. Last year, RadioShack CEO Dave Edmondson resigned after his resume was questioned.

Before that, Boeing CEO Harry Stonecipher was forced out after admitting to an affair with a female Boeing executive.

"There's no question companies are much more sensitive to ethical conduct on the part of their executives," said W. Michael Hoffman, executive director for the Center for Business Ethics at Bentley College in Waltham, Mass.

Scandals involving Enron Corp., WorldCom Inc. and Adelphia Communications Corp. have tightened the focus on ethical conduct in recent years, Darcy said.

"What all of that did was awaken the regulatory and prosecutorial communities as to what's going on in business, and obviously that has sensitized businesses to a tremendous degree," he said.

Federal sentencing guidelines updated in 2004 allow judges determining punishment to look not just at legal violations but also at the ethical environment a company promotes.

Regulatory agencies like the Securities and Exchange Commission or the Environmental Protection Agency look to these guidelines when they mete out discipline.

"Mere compliance with the law is not enough," said Darcy, whose association has grown from 600 members in 2001 to 1,400 today.

Prosecutors also consider a company's ethical climate when deciding whether to press charges against an individual or the business.

"If a company has an effective ethics system in place, a prosecutor can make the presumption that this is a bad apple and not a bad company and therefore choose not to indict the company," said Kirk O. Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University.

Investors also are paying closer attention to whether companies act ethically. Hoffman noted that share prices generally dip whenever an ethical crisis arises. WellPoint shares, for instance, fell 3 percent the day the company announced Colby's resignation.

The close scrutiny has forced corporations to act tough at all levels. Otherwise, "their efforts to develop an ethics and compliance culture will be exposed as being a sham," Hoffman said.

WellPoint outlines its expectations in a 25-page document called "Standards of Ethical Business Conduct" that covers issues including ethical decision-making, inappropriate e-mails and drunken driving.

Such conduct codes are nothing new, experts say. The difference between corporate culture today and a couple decades ago is that more companies are sticking to them.

"Reputation risk today is as great, if not greater than, strategic, financial and operational risk," Darcy said.