PART 2: ETHICAL ISSUES AND THE INSTITUTIONALIZATION OF BUSINESS ETHICS "This isn't good, Mary. A couple of and selling more and more to pull his own analysts were just fired for doing that at a big firm last week," said Albert. Several weeks later the people some of his uncle's friends' portfolios were who were sending Mary the obnoxious losing significant value. Other matters, messages were fired. Mary was also asked however, were causing him even more to see the head of her division. When she portfolio, as well as those of his clients, into the black. He was getting worried because anxiety. The previous week Barry had called him, asking for some inside information came to his office, he said, "Please shut the door, Mary. I have some bad news. I on several companies that he was working know that you weren't involved with what with for an IPO. Albert knew that this was happening with the e-mail scandal; could be construed as insider information however, you did forward messages that and had said no. contained such material. As a result, I have no alternative but to give you your two weeks' notice. I know this is unfair, but a while. I need to score big because of I have my orders. Because of this mess, the holidays. You probably don't know, the SEC wants to check all your trades for the last eight months. It seems to be a formality, but it will take time, and as you looked upon favorably. I'm not asking for well know, the chances of going to another firm with that hanging over your head are Is that clear enough for you, Al? E-mail it slim. I'm sorry that it's only two months until the holidays." That night Mary fell hung up. into a depression. To exacerbate the situation, Albert's parents were flying in from the People's you. I want you to buy some stock for a Republic of China. They were not happy few friends and me. When it goes to $112, with Albert's marriage to a non-Chinese I want you to sell it. We'll pay the taxes woman, but they had consoled themselves and give you a little bonus for Christmas as that Mary had a good job. They had also well. I want you to buy tomorrow as soon said that if things should go badly for them in New York, they could always come to the parents' retirement home in Taiwan. See you tomorrow." However, the idea of leaving the United States, attempting to learn Mandarin, and QUESTIOONS · EXERCISES raising children in an unfamiliar culture 1. Identify the ethical and legal issues of did not appeal to Mary. Albert was also having some problems. Because their income was cut in half, Albert tried to make up for the loss by trading in some high-risk markets, such as commodities and precious metals. However, many of these investments turned sour, and he found himself buying Today, Barry called again and said, "Look, Al, I've been doing you favors for but what I've been doing for you could be construed as spinning, which is not the IPO information–I'm demanding it. over by tomorrow morning." Then Barry An hour later Albert's supervisor came in and said, "“Al, I need a favor from as the market opens. Here are the account numbers for the transaction. I must run. which Albert needs to be aware. 2. Discuss the advantages and disadvantages of each decision that Albert could make and has made. 3. Identify the pressures that have brought about these issues. "This case is strictly hypothetical; any resemblance to real persons, companies, or situations is coincidental. RESOLVI NG ETHIC AL BUSINESS CHALLENGES* Albert Chen was sweating profusely in his Jaguar on the expressway as he thought about his options and the fact that Christmas people had engulfed both him and Mary. He had graduated with honors in finance and had married Mary in his senior year. They had both obtained prestigious brokerage jobs in the New York area, and both had been working killer hours John F. Kennedy International Airport, seemed to to develop their accounts. Listening to other be looking up from an abyss, with no daylight to brokers, both had learned that there were some be seen. Several visits and phone calls from various added expenses to their professions. For example, and the Chinese New Year were at hand. He and his wife, Mary, who were on their way to meet Albert's parents at New York's CHAPTER 4: THE INSTITUTIONALIZATION OF BUSINESS ETHICS they were told that brokers need to "look" investigated the company and discovered and "act" successful. So Albert and Mary that the stock was grossly undervalued. bought the appropriate clothes and cars, She made a few phone calls and found a joined the right clubs, and ate at the right company that was interested in doing a restaurants with the right people. They hostile takeover. Mary also learned from also took the advice of others, which was to identify the "players" of large corporations acceptable to the union, the union would at parties and take mental notes. "You'd do everything in its power to oust the old be surprised at what information you hear management-by striking, if necessary- with a little alcohol in these people," said one broker. Both started using this strategy, started to materialize, Mary told several and five months later their clients began to of her best clients, who in turn did very see significant profits in their portfolios. Their good luck even came from her father that if a new management were and welcome the new one. As things well on the stock. This increased her status in the firm, which kept drawing bigger strange places. For example, Albert had clients. an uncle whose work as a janitor gave him access to many law offices that had public stock offerings (IPOS) of new information on a number of companies, especially those about to file for a very hot IPO, he would talk to some of bankruptcy. Mary and Albert were able to his best venture-capital friends, who then use information provided by this uncle to bought the IPO5 and gained some very benefit their clients' portfolios. The uncle good returns. This strategy helped attract even had some of his friends use Albert. Albert soon became a player in initial companies. Occasionally, when Albert saw some larger players in the market. By this To Albert's surprise, his uncle's friends point in his young career, Albert had made often had nest eggs in excess of $200,000. Because some of these friends were quite elderly, Albert was given permission to buy worked on the stock floor. As they were and sell nonrisky stocks at will. Because both of them were earning wanted to, he, as a favor, when placing good salaries, the Chens soon managed to orders to buy shares, would occasionally invest in the market themselves, and their put Albert's or Mary's trade before the investments included stock in thecompany for which Mary's father worked. After eighteen months, Albert decided to jump Mary told Albertabout what was happening ship and start working for Jarvis, Sunni, Lamar & Morten (JSL&M). JSL&M's some of the brokers with off-color jokes reputation was that of a fast mover in the business. "We go up to the line and then men. I just don't care for it." measure how wide the line is so that we know how far we can go into it," was a Albert asked. common remark at the brokerage firm. About six months ago, Mary's father, opening my messages if they come from who was with a major health care company, commented that the management team was running the company into the ground. "If only someone could buy the company and put in a good management team," he mused. After the conversation, Mary a great many friends. One of those friends was Barry, who talking, Barry mentioned that if Albert client order. The first sign of trouble came when at her office. "I'm getting e-mail from and even some nude photos of women and "So what are you doing about it?" "Well, I've just started not even these people," Mary replied. "What about messages that request that you send them on? What do you do with those?" queried Albert. "I just e-mail them along without looking at them," was her response.