As the stock-option scandal has deepened in Silicon Valley, evidence has mounted that executives, directors, accountants, lawyers and employees commonly bent the rules, flouted them or looked the other way. As an internationally known arbiter of business ethics for nearly 30 years, Kirk Hanson won't go so far as to say the scandal indicates that Silicon Valley has a culture of cheating. He sees many ethical gray areas and empathizes with executives who believed that rigging the prices of stock options had become an accepted and necessary practice in the battles to recruit employees during the tech boom. Still, the head of the Markkula Center for Applied Ethics at Santa Clara University says there's compelling evidence that federal prosecutors should punish scapegoats to rein in behavior that was ``so aggressive and so egregious it was clearly on the wrong side of the line.'' Here's an edited transcript of a conversation between Hanson and Mercury News Staff Writer Mark Schwanhausser.