Question

The year is 2020. You just got your dream job as a stock broker on Wall Street. They gave you a nice signing bonus and you are making a lot of money. You also have the opportunity to make a large year-end bonus if you meet your sales quota. But your Boss has a reputation for firing new employees that don’t reach those sales goals. Timing could not have been better because your student loans are thru the roof and your parents were just threatening to kick you out of the basement. You buy yourself a couple new suits, rent your apartment in Manhattan and show up 30 minutes early to work ready to start your career.

Your Boss, Mr. Money bags, has you start cold calling people to get them to buy stock in TEXLA corporation. He says that TEXLA is a great new company that is working on a new drug that might cure cancer. He failed to tell you that the President of Texla is his brother-in-law. You start making sales calls and find out that the easiest people to convince to buy the stock are senior citizens.

The first year you make reach your sales quota and receive a 1 Million Dollars bonus which you immediately invest in TEXLA stock because it has been doing so well. You also invested all of your parent’s retirement savings in TEXLA.   Later that year you accidently receive an email that was addressed to Mr. Moneybags from his brother-in-law the President of TEXLA which informed him that the testing shows their new drug actually makes cancer worse. You are the only one who has this information and know that once this information hits the internet the value of the stock will drop to ZERO but no one will ever find out that you have this inside information. You also remembered from your awesome business law class that it is illegal to use “Inside Information” to benefit yourself or your clients.

Your Boss will lose his investment, you will lose your investment, your parent’s retirement savings will be lost along with all of those senior citizens that listened to your advice.        

You only have an hour before the news will hit the press which means you can’t call everyone. What do you do?????

Identify the ethical dilemma(s) in this situation.

REQUIREMENT

Use an ethical decision making model to determine the right course of action to take in this situation.Use the Business Process Pragmatism as a guide for your answer.

Business Process Pragmatism is :

1. Step 1

   Inquiry

   First, the decision maker must understand the problem. This step involves identifying the parties involved (the stakeholders) and collecting the relevant facts. Once the ethical problem or problems are clarified, the decision maker lists any relevant legal and ethical principles that will guide the decision.

2. Step 2

   Discussion

   In this step, the decision maker lists possible actions. The ultimate goals for the decision are determined, and each option is evaluated using the laws and ethical principles listed in Step 1.

3. Step 3

   Decision

   In this step, those participating in the decision making work together to craft a consensus decision or consensus plan of action for the corporation.

4. Step 4

   Justification

   In this step, the decision maker articulates the reasons for the proposed action or series of actions. Generally, these reasons should come from the analysis done in Step 3.

The following case further demonstrates the types of situations that can occur when management demonstrates a lack of concern about ethics.

5. Evaluation

This final step occurs once the decision has been made and implemented. The solution should be analyzed to determine if it was effective. The results of this evaluation may be used in making future decision

Answer 1

step 1:

Problem the decision maker is facing is whether to use a material public information that could affect the value of investment.The parties involved are your parents's retirement savings, your clients money and your own money.

step 2:

The decision maker can either use the info or not use the info which is material to his own and his clients investments. If he uses the material non public info he will be able to save the value of his investments but violate the standard 2(A), Integrity of the capital markets(Material non public information).

step 3:

The right course of action would be to disclose that the material non public information is known to you. One should not act and not cause others to act on this information.

step 4 :

The reasons for choosing this action is to prevent violation of the standards set forth by the CFA institute and to preserve the integrity of the capital markets.

step 5:

The decision will reduce the value of investment but prevent conviction for violation of standards.