What were the legal and ethical ramifications of the mid 1980's Research Paper

What were the legal and ethical ramifications of the mid 1980's insider trading scandal - Research Paper Example The stock trading of an organization as well as other securities, which include bonds or stock options, by people who have significant inside information about a company is called the insider trading. It is considered to be legal by most countries, but only in the case that it does not harm the company and its profit making in any way. The insider traders are mostly the officers, key employees, directors and other shareholders who may gain such authentic information. But this very term, insider trading, also have negative connotations. In the United States, it is incumbent upon the inside traders to publicly declare their trade transactions to the regulatory authority within the given time of business days. However, when the same thing is done based on material nonpublic information while an insider is carrying a duty, it becomes a fraud and a breach of trust. This illegal insider trading, which as a result raises the cost of capital for security issuers lead to a large decline in ec onomic growth. There are ethics officers, who are commonly known as business conduct officers, hired by organizations to protect their interests (Geisst, 2006). â€Å"Wall Street insider trading scandal 1980†: This practice has started since the mid-1980s due to constant series of financial frauds, corruption and many abuse scandals which surrounded the US defense industry. To protect and promote the ethical business practices the Defense Industry Initiative (DII) was formed, which set an initial standard for ethics management in companies. One such famous case of an insider trading scandal is that of â€Å"the Wall Street insider trading scandal of the mid-1980s†. Its primary player was Dennis Levine who was a managing director at Drexel Burnham Lambert (Newsweek, 1986). The initial charge was filed by the US Attorney Rudy Giuliani which finally led the investigators to arrest Ivan Boesky. Levine built a whole network of professionals in many Wall Street firms who wer e engaged in insider trading. He maintained an account with a fake name in the Swiss banks subsidiaries in Bahamas because it has some of the hardest bank secrecy laws as compared to anywhere in the world. He did this to be safe from detection. He then had to shift his business in May 1980 to â€Å"Bank Leu† which earned him around $10.6 million (Stewart, 1991). But at Bank Leu, the officials there realized Levine’s insider trading activities and banked on him themselves. But they did this collaborative action through Merrill Lynch, which detected a suspicion about trading activities in two other brokers’ personal accounts in May 1985. This started an internal investigation which reached Bank Leu, where due to the bank’s secrecy they had to forward the matter to the SEC â€Å"U.S. Securities and Exchange Commission†. It was decided by the bank officials that Levine should give his reasons for such an insider trading, but due to their destroying mos t of the sensitive documents relevant to Levine’s activity, they were charged with obstruction of justice (Dentzer, 1986). The Bank Leu officials decided to cooperate with the SEC because they noticed a huge gap between the actual managed accounts’ statements and the omnibus records. The stock trading was taken to be distinct from normal banking transactions and hence the bank named Levine guilty as the allegations were proved against him, thus his fraudulent activities led to his arrest. There was a tremendous amount of evidence against Levine related to securities fraud, obstructing justice, tax evasion and a charge of perjury as well. Levine decided to coordinate with the government in order to disclose the names of others who were involved alongside him (Levine and Hofer, 1991). This coordination with the government helped him to have a reduced sentence of two years in prison with a $362,000 fine (Time Magazine, 1987). He also agreed to pay the penalty for these il legal profits as well and also approved of

4 questions Essay Example | Topics and Well Written Essays - 500 words - 3

4 questions - Essay Example Leadership has been in existence since the traditional times where people elected chiefs and warrior who represented smaller groups of people and has been developed to the kind of leadership today where people elect presidents and governors who represent larger groups. It is the study of knowledge application on action of people, individual actions, and group actions in an organisation. Organizational behavior therefore tends to interpret organizational relationships basing facts on an individual person, a group of individuals, or the whole social system. The purpose of organizational behavior is to improve the relationship among people in an organization by achieving all the objectives (human, organizational and social) at a go. An example of its application is a situation whereby the human resource manager carries out a research to understand the employees so that their personal objectives are achieved while at the same time the objectives of the organization are achieved. Most organizations operate according to the four models of organizational behavior which are autocratic, custodial supportive and collegialization. Politics dates back in the 17th century when leadership was introduced and the competition for the leadership position influenced the rise of politics. Politics can be defined as the influencing other people on a civil level or it can also refer to the process of controlling the community or state in an organized manner. Politics involve things such as influencing people to ones political views, making laws, exercising equality among the people and negotiation with other political subjects. The level of politics depends upon the number of people that the politician is leading and the power that the group has. An example of a political situation is the government of USA where Obama is the president and this is the highest rank of