ethics case

THE INSTITUTIONALIZATIONOF BUSINESS ETHICS

ETHICAL BUSINESS CHALLENGE

Presented by Group 4

OURTEAM Dinh Thi Kieu Trang

Doan Huong Giang

Ta Thi Ngoc Hanh

Nguyen Trung Hieu

Tran My LinhNguyen Thanh Minh

Le Dinh Minh

Dao Minh Ngoc

THECONTENT

CASE SUMMARY

ISSUES

ADVANTAGESDISADVANTAGES

PRESSURE

CASESUMMARY

CASESUMMARY

This is Albert Chen And Mary – his wife

Obtain prestigious brokerage jobs in the New York area

Learn to add some expenses to their professions such as try to “look” and “act” successful

Also used a strategy: get information from people with a little alcohol in their client gain significant profits in their portfolios

CASESUMMARY

Albert’s uncle

Albert had an uncle working as a janitor

He gave Albert access to many law offices had information on a number of companies,

especially those about to file for bankruptcy

The Chens use these information to benefit their clients’ portfolios

Albert was given permission to buy and sell non-risky stocks at will from his uncle’s friends

CASESUMMARY

The Chens soon have enough money to make their own investment, including Mary’s father.

Mary learned from her father that his company is having problem with the old management

With this information, Mary told her clients who in turn did well on the stock

He talked to his best venture-capital friends when he saw a very hot IPO attract some larger players in the market.

Being a player in IPOs of Albert’s companies:

Barry, Chen’s friend, help Albert place Chen’s trade before the client order

CASESUMMARY

some of broker send email

with off-color jokes and nude photos

Mary forwarded these email without a glance

Weeks LaterThat person were found and fired

Mary did forward messages that contained such material, so the head of her division decided to fire her

Because of this mess, SEC wanted to check all her trades for the last 8 months

CASESUMMARY

Albert’s parents flew to US from China

offered a house in Taiwan when things go bad

This did not appeal to Mary which really exacerbate the situation

CASESUMMARY

Albert tried to make up for the loss by trading in some high risk markets (commodities and precious metals) But many of these investment evaporated. The investment of him, as well as his clients, was a big mess

Some of his uncle’s friends’ portfolios were losing significant value.

CASESUMMARY

Barry asked for inside information

on several companies that Albert was working with for an IPO

This could be construed as insider information Albert said no

Weeks laterBarry called for Mr. Chen again

ask for the IPO information as an order, not a request

CASESUMMARY

ask for a specific order to buy the stock as soon as possible and sell stock when the price goes to $112

Albert will receive a little bonus for that action.

Albert’s supervisor

FIRSTGAME

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FIRSTGAME

CORPORATE INTELLIGENCE

SEXUAL HARASSMENT

INSIDER TRADING

OMISSION LYING

CONFLICT OF INTEREST

LAW REGULATING COMPETITION

LAWS PROTECTING CONSUMERS

ISSUESOF THE CASE

CASE’SISSUES

EthicalIssues

Corporate Intelligence

SexualHarassment

InsiderTrading

OmissionLying

Conflict ofInterest

CASE’SISSUES

CORPORATEINTELLIGENCE

involves an in-depth discovery of information from:• corporate records• court documents• regulatory filings

• press releases• any other background information that can be found about a company

Physical Hacking: Albert’s uncle whose work as a janitor gave him access to many law office that had information on a number of companies, especially those about to file for bankruptcy.

CASE’SISSUES

SEXUALHARASSMENT

Mary had already known that the mail included some nude photos, anyone’s private images. However, she did not seem to care, forwarded it without opening, which might cause many consequences unpredictably.

INSIDERTRADING

When Albert saw a very hot IPO, he would talk to some of his best venture-capital friends, who then bought the IPOs and gained some very good returns.

CASE’SISSUES

OMISSIONLYING

CONFLICTOF INTEREST

When Albert has financial problem, he invested in some high-risk market using his own money as well as those of his clients. He did it purposefully without informing to his clients, especially his uncle’s friends, who just agree to buy and sell non-risky stocks at will.

When Albert chose to invest in high-risk market, he chose his owninterest over the interest of his clients.

CASE’SISSUES

LegalIssues

Law regulating

competition

Laws protecting consumers

CASE’SISSUES

LAW REGULATINGCOMPETITION

Albert had no agreement to take information from law offices, he just steal it easily because his uncle work as a janitor there. Use that information to made profit and to benefit their clients’ portfolios intruded the law regulating competition.

Barry has demanded for inside information on several companies that Albert was working with for an IPO.

CASE’SISSUES

LAWS PROTECTINGCONSUMERS

After Albert and Mary’s income was cut in half, he tried to make up for the loss by: trading in some high risk markets turn all his clients’ portfolio into the black - including his uncle’s friends’ portfolio.

Albert just had the permission to buy and sell non-risky stocks at will. He traded in high-risk markets without informing his uncle’s friends.

SECONDGAME

SECONDGAME

Discuss about advantages and disadvantages of Albert Chen’s decisions

ADVANTAGESDISADVANTAGES

ADVANTAGESDISADVANTAGES

ISSUE 1

• Using alcohol to have valuable information

• His uncle give Albert access to many law offices that had information on a number of companies

• Use information to benefit their client’s portfolio.

AdvantagesBecause of having known information about many companies, Albert can decide buying and selling stock in the right times. Make benefit for clients’ portfolios. Invest in the market and take a lot of profits for himself.

Disadvantages• His action is unethical and even illegal because Albert had no agreement to take information from law offices• If Albert is detected, he may lose a lot of money and goto jail

ADVANTAGESDISADVANTAGES

ISSUE 2

Albert, who holds IPO information, would talk to some of his best venture-capital friends, who then bought the IPOs and gained some very good returns.

Advantages• Albert have sold some hot IPOs to his venture-capital friends to get money and attract some larger players in the market• Have many valuable friends and his career can develop fast

Disadvantages• This action is considered as insider trading which is unethical• If Albert is detected, he may lose a lot of money and face legal problems .

ADVANTAGESDISADVANTAGES

ISSUE 3

One of Albert‘s friends was Barry, who worked on the stock floor. As they were talking, Barry mentioned that if Al wanted to, he, as a favor, when placing orders to buy shares, would occasionally put Albert’s or Mary’s trade before the client order.

Advantages• Benefit Albert

Disadvantages• Illegal and unethical• Somehow Albert will depend on Barry in the future

ADVANTAGESDISADVANTAGES

ISSUE 4

Albert tried to make up for the loss by trading in some high risk markets such as commodities and precious metals. many of these

investments turned sour. He found himself buying and selling more and more to pull his own portfolio, as well as those of his clients, into the black.

Advantages• Higher risk, higher return can make a lot of money

Disadvantages• If his risky portfolio lose significant value, he can make his loss worse• When Albert chose to invest in high-risk market, he chose his own interest over the interest of his clients. This is considered as a conflict interest issue, so his decision is unethical.

ADVANTAGESDISADVANTAGES

ISSUE 5

Barry has demanded for inside information on several companies that Albert was working with for an IPO. Barry had helped him a lot in placing his orders to buy shares before the client order

If Agree If Disagree Advantages - Keep in touch with

Barry. And Barry will continue to help him put his trade before the client order

- Barry won’t delate the collusion with him in the past

- Keep this information in secret, make fair in the market to all others IPO investors

ethical + legal

ADVANTAGESDISADVANTAGES

ISSUE 5

Barry has demanded for inside information on several companies that Albert was working with for an IPO. Barry had helped him a lot in placing his orders to buy shares before the client order

If Agree If Disagree Dis-Advantages

- Get more favor from Barry who will benefit from it.

- Commit insider trading which is considered as an unethical and illegal issue

-Break the relationship with Barry (may be some others friends)- Financial loss- Barry may delate Albert and he will get exposed for spinning (unethical and illegal)

ADVANTAGESDISADVANTAGES

ISSUE 6

Albert, are asked by his supervisor to buy some stock as soon as the market open tomorrow for a few of his friends and him. They would pay the tax and pay Albert as a bonus.

If Agree If Disagree Advantages - Make some money

to make up for the his wife jobs

- Maintain a positive relationship with his supervisor

- Ethical feel relieve + comfortable- Legal stay away from legal problems

ADVANTAGESDISADVANTAGES

ISSUE 6

Albert, are asked by his supervisor to buy some stock as soon as the market open tomorrow for a few of his friends and him. They would pay the tax and pay Albert as a bonus.

If Agree If Disagree Dis-Advantages

- Get more favor from his supervisor after that

- Possibility to face to the court because of violating the law

- Lose the chance to make some money

- Damage the relationship with his supervisor, which could make his jobs harder as he already had plenty of troubles

PRESSUREOF ALBERT CHEN

ALBERT CHEN’SPRESSURE

INTERNAL PRESSUREPressure 1

ALBERT REPUTATION AND CREDIBILITY

Through his trading and strategies, he has gain a lot of reputation and credibility. He is even a player in IPO of new companies.

Pressure 2ALBERT INVESTMENT

Albert chose to invest in some high-risk markets and many of these investment turned sour. Moreover, he pulled his portfolio further into black.

ALBERT CHEN’SPRESSURE

EXTERNAL PRESSUREPressure 1

ALBERT’S CLIENTS

Albert invested for clients’ portfolio without permission. Moreover, these investment turned into black which means that a lot of pressure is coming to him.

Pressure 2FRIENDS AND RELATIVES

Many of his uncle’s friends’ portfolios were losing significant value.

Barry asked for some inside information on several companies that he was working with for an IPO. Barry demanded it very concrete. This is considered as insider trading if Albert does the favor.

Pressure 3ALBERT’S SUPERVISOR

The supervisor asked Albert to do a specific order on a stock. This is quite suspicious as the detail of the order is so specific that Albert could be the one getting the heat. There may be a stock price manipulation.

OUTSIDER

ALBERT CHEN’SPRESSURE

EXTERNAL PRESSUREPressure 4

MARRY

She was fired and being under investigation by SEC which could turn out that she has violate many laws. Besides the salary was cut in half, the legal court could cost Albert even more money. Moreover, Marry may never got the same job again.

Pressure 5ALBERT’S PARENTS

Albert’s parents were not happy with his marriage to a non-Chinese woman, Marry.

They offer a place in Taiwan, but it is not appeal to Marry.

FAMILY

Thank you for Listening