Discuss About The Business Law Public Responsibilit And Ethics?
Ethical issues have been the major concern of the organisations in the present time. The business organisations basically face complex situations and struggle to avoid ethical issues. The immediate need of the present situation is to maintain a strict code of conduct and avoid ethical issues. The diverse culture of the business organisation and in the process of their decision-making, compliance & governance the ethical issues are identified.
The major concern of the business organisation is to follow the strict principles and code of conduct based on the ethics. The management of the organisation requires identifying the facts related to the ethical dilemmas and these issues are required to be assessed in order to define a different course of action so that the companies will not face any difficulties in the process of their governance (Heskett, 2011). The organisation will find the root cause of the issue and will make strategies to resolve the issues. Thus it is imperative to say that appropriate decisions based on the ethical code will help the employees and the management of the organisation to work in a transparent way. The ethical issues will be resolved and the culture of the company will be based on the values and beliefs that will help all the stakeholders to gain benefits.
The present report is all about the impact of unethical practices made by Rajaratnam and The Galleon Group. The unethical practices made by Rajaratnam is related to the inside trading that gathered the information of the leading companies across the world. The allegation was on Rajaratnam for collecting the inside information bribing the employee of Intel Corporation. The inside trading affected some important companies like IBM, Hilton Hotel, and Google. The immoral way of gathering information caused a huge damage to the companies and on the other hand, Rajaratnam could manage to gather $ 64 billion (Jennings, 2013). The pre-planned unethical activities brought a short-term success to Rajaratnam and his company but in the long run, he lost his credential in the market and he was convicted of the conspiracy of collecting the inside information. He was sentenced to jail and was fined. The unlawful act of Rajaratnam forced the regulators of the law and executives and the governance to remain vigilant to all the activities in the organisations. The unlawful activities also affected on the trust of the customers, the employees and of all the stakeholders of the company (Mittelstadt, B, 2017). The unethical behaviour of Rajaratnam was an alarm for the trading companies and they remain alert in the process of their business.
The inside trading incident is an eye opener for all the business organisations that deal in trading activities. Rajaratnam and his Galleon Group is the example of unethical practices occurred in the companies. The conspiracy of getting rich with a short period of time brought the audacity of greed in the minds of the group of people those who are involved in the inside trading (academia.edu, 2017). The greed of accessing the secret information of the investors and selling the information for personal and financial benefits considered as the most unethical activity conducted by Rajaratnam and his coworkers. Rajaratnam could manage to earn $64 billion for the inside trading and later he was convicted on all eleven charges. The unethical success story of Rajaratnam brought huge loss to the leading companies like Intel, IBM, and Google. The non-public information of the companies was made public and with the access of the information, the companies could make illegal practices (chegg.com, 2017). The objectives of Rajaratnam to exploit the information of the insider before the information is made public in order to trade ahead of the announcements made in public on the earning, forecast, merger & spinoff. This was an illegal practice to disclose the insiders’ information for the financial benefits.
Rajaratnam exploited the information of the customers with the help of his secret executives and that enabled him to capture a huge network of information. He seduced the trust of the people and betrayed them. His business model was based on cheating. The court could find the mechanism of fraud made by Rajaratnam and his team members (community.cengage.com, 2017). They swapped the secret information and recruited corporate insiders for providing them information. Rajaratnam plotted to exploit the information and he avoided any suspicions from the regulators. The unethical practice of Rajaratnam proved that his practices were illegal.
The financial institutions require to remain alert to the fraudulent practices and avoid the unethical activities in the business organisation. The investors who focused on the market research should not involve in this unethical practices. The customers are also very vigilant now and they are keeping eye on the growth and development of the trading market. The regulators are very capable enough to find out the unethical activities. Wall Street is prepared against the illegal investors (community.cengage.com, 2017). The responsibilities of the bankers & brokers to enrich themselves are required. Thus the reformation is required to avoid unethical practices. There is also a need of maintaining authentic timestamps by the traders in order to provide information of the traders. Establishing relationships in the corporate world the financial groups get the advantage over the average investor. The hedge funds get non-public information about the organisations, trend in the market & the continuing events of the potential market. These financial groups recruit consultants in order to get more information (cqpress.com, 2011). These financial groups take the help of outside experts and pay them for the inside information on the stocks and the impact of share pricing on the financial performance or the performance of the products. The secret activities were very difficult to identify by the regulators.
The unethical inside trading brought horrible experience to the leading financial institutions. The reputed companies, advisory board, banks etc. take care of revising the rules and regulations the compliance standards in order to avoid any kind of issue in the future (dailykos.com, 2011). This has been found that mistakes in the governance cause intolerable problems to the financial institutions. The need of revising the trading rules had been very important and the strict regulations were required to make against the discloser of the non-public information.
The insider crime has brought a change in the governance pattern. The government has become very vigilant and is looking into the activities of the financial institutions. The wiretaps will remain available to the commission of Security and Exchange. The incident also makes people alert to deal with the information that has financial value. This act proves that greed is not good.
The business organisations have potential customers. These organisations collect the data of the information for the business purpose. In order to capture the data of the customers and use them as per the need of the organisation, there are various techniques used by the companies. For the trading companies, it is important to keep the track record of the investors or the customers (epic.org, 2010). Basically, companies collect information through the phone calls, meetings with the clients and even though the text message. These are the techniques used by the companies. These are the common mode of collecting information of the customers used by the companies while dealing with the customers. In these process, there is also a chance of the leak of the information (governanceforstakeholders.com, 2017). The gatherer of the information can mishandle the information and take the advantage of it.
Rajaratnam followed a different kind of method to gather the information of the customers. The information collected by the companies about the clients or the customers was gathered by Rajaratnam and his company by hiring the employee of the organisation. This kind of gathering information is called inside trading. In this process, the employee of the organisation provides information to the conspirator so that the information will be passed to him or her and then the information will be used for directing the process of the trading on the way that the conspirator wants (icsi.edu, 2014). This activity is treated as the most unethical practice and the illegal people are involved in this process of cheating people.
In this unethical process, there is urgent need of the attention of the regulators, investors, and executives. The executive of the business organisation requires seeing the development of the processes of the organisation. The executive of the company should not involve his or her relatives in the process of the business (icsi.in, 2010). The executive should give more attention to the communication process so that the business organisation will find the more involvement of the executive in the activities. The executive should not involve the friends & relatives during the business process of the organisation. The companies should encourage people to avoid exposing the inside information. The employees of the organisation should not be involved in the unethical practices.
The investors are required to be very vigilant. The unethical practice can be avoided by the investors once they see it. They must raise their voice when they find that inside trading is occurring in the organisation (ifc.org.wps.wcm, 2017). The inside trading will bring huge financial loss to them and they may withdraw from the organisation. There is also a need for reporting the concerned legal authorities regarding the inside trading and the damages that cause due to the inside trading.
The role of regulators is very important here to protect people from the inside trading. The regulators should keep eye on the operations of the organisation and should see that the code of conduct is adequately maintained by the companies (ijsses.org, 2017). The regulators are required to restrain people to indulge in the unethical practices so that the companies will suffer at the end.
Rajaratnam and his team made a wrong practice and hired people to give them inside information of the customers. The inside information was used by Rajaratnam for his personal use and the profits amounted $ 64 billion. Thus it is evident that the medium of extracting inside information by Rajaratnam was an unethical activity.
The companies collect the data of the customers for the internal use so that they can develop the services and products as per the need of the customers. Thus the companies keep the information of their customer’s secret so that other companies cannot get the idea about the movement of the customers (justice.gc.ca, 2017). Thus the sharing of the confidential information of the organisation will be treated as an unethical activity and the companies should constraint themselves from doing this illegal activity. The sharing of the information is always the risk for the companies.
The implication of the sharing of the information and basically the inside information is very dangerous. Due to the disclosure of the information of the investors, the financial activities are monitored and the information collected by the company can immediately make predict about the intention of the investors (justice.gc.ca, 2017). The investors will lose their profits. The decision of trading a stock is also affected by this. The persons involved in the illegal practice will take the advantage of the inside trading.
The executive and the regulators will also similar problems to regulate the activities. There is no specific mode to identify the people those who are involved in the inside trading. The unethical practice has only become public when the corruption is identified (law.upenn.edu, 2017). Thus for the regulators, it is very difficult to identify the culprits those who are supplying the secret data to other.
It is also a matter of fact that the inside information changes the decision of the investors. While trading a stock the investor is monitored in this process. Thus the prediction of the analyst will trouble the company as well as the whole trading of stocks. The legal body does not allow the business organisation to do wrong practices.
The case of Rajaratnam gives the insight to study about the illegal practices made by the organisations. Rajaratnam could manage to get the insider information by hiring the employees of the different companies. The activities of Rajaratnam are called illegal. Rajaratnam could hire the number of the analyst to make market research and predict the market (kaloramapartners.com, 2012). The analyst can help Rajaratnam. But the illegal way of getting the information brought huge loss to the credibility of the company in the market. Rajaratnam got a short-term benefit but he lost hard-earned reputations. He was convicted and sentenced to jail for his illegal activities.
The implication of the unethical activities is very wrong. Rajaratnam could manage to earn more credibility in the market if he has opted the ethical principles. The experience he had earned while working in Needham & Co would help him to make more financial analysis and his company could also earn more benefits (justice.gc.ca, 2017). The act of Rajaratnam states that the non-public information should not be given to others by those who access it. It is always correct to gather the information of the customers but passing the information for benefits is a crime. This is definitely against the legal process. Thus the implication of disclosing non-public information is an unethical act.
The inside trading may give short-term benefits to the person. But it is true that the ability of the company will fall down in the long-term process as it remains involved in the inside trading. Thus the individuals involved in inside trading should be given punishment. The ill effect of inside trading is that the investors will not focus on investing in the potential market and they will detach themselves from the market. There is also another chance of ill effects. The investors will focus on the secured way of trading and will procure only the bonds of the government. Thus it will seriously affect the ability of the market. It is always important to make an investigation before making any trading activity.
This is a fact that punishment to Rajaratnam is an evidence of illegal practice made by the fund managers and investors. The sharing of non-public information is considered as an illegal activity. The secret investigation will alert those who remain involved in passing the non-public information to others for their personal gain. The secret investigation is also giving the regulators and the policymakers a warning to keep vigilant eyes on the movement of the fund managers (justice.gc.ca, 2017). Rajaratnam is an example of the damage of the companies like IBM and Google. The financial gain of Rajaratnam brought huge loss to the companies. This investigation will help the organisations to remain alert and not to disclose the information which is very much secret in nature.
The case of Rajaratnam also provided an example of punishment for illegal work. The fund managers will never take steps to pass the information on the status of their organisation depends on it. Once the company is exposed the possibility of growth of the company is impossible (kaloramapartners.com, 2012). The incident of Rajaratnam can give benefits over the competitors in the market. But this benefits cannot stay for a long period of time. The stock market and trading require associating with day to day analysis. The company should employ people to work for the organisation other than involved in the inside trading. The illegal practice will spoil the credibility of the company in the market.
This is important for the managers & the investors to take appropriate decisions and they should avoid any wrong practice (community.cengage.com, 2017). They should understand the survival of the business does not depend on the inside trading. The wrong practice will bring a fatal consequence for the organisations. The unethical activities of the fund managers and the investors will bring loss to the customers and the company will lose its credibility in the market. Later the survival of the company will be impossible in the future. This has been evident from the case study.
Conclusion
The case study on inside trading is an example of unethical activity. The act of Rajaratnam has brought a very negative impact on the stock market. The trade is affected for the inside trading. The unethical activities of Rajaratnam remain responsible for the threat in the trading of stock. The customers get to know about the ill effects of the inside trading. Thus it is very important to stop the unethical practice so that other fund managers and the investors will not involve in the wrong practice. The regulators are required to see that no fund manager or the company is involved in sharing the non-public information of the company. Thus it is important to avoid any illegal activity. The fund manager should know that it is not important to disclose the inside information of the customers. The information which does not affect the organisation or which has no harm can only be disclosed. The people those who are involved in accessing the information of the companies should not try to get benefits out of it. The case study shows that Rajaratnam’s benefits were for a very short period of time. He brought a huge loss to him individually and also to his company. The case of Rajaratnam is a warning for every fund managers not to involve in wrong practices.
Rajaratnam could use his rich experience in the business instead of getting involved in the illegal practices. The adequate knowledge he has earned working in his previous company could help him to make an analysis of the market. The help of another analyst could also help his to make more market research. This would help him to predict the market and get more benefits. As a successful analyst, he has a great reputation. But the motif of getting immediate befits caused a huge loss to him. Thus it is very much important for every fund manager to remain loyal to the organisation and should not try to disclose the information of the company. The non-public information should not be disclosed at any cost.
References
academia.edu, 2017. ETHICAL ORIENTATION AND PERSONAL BENEFIT IN INSIDER …. [Online]
Available at: www.academia.edu/…/ETHICAL_ORIENTATION_AND_PERSONAL_BENEFIT_IN.
[Accessed 17 09 2017].
chegg.com, 2017. If It’s Legal. It’s Ethical; And Besides, Ever… – Chegg. [Online]
Available at: www.chegg.com › … › operations management questions and answers
[Accessed 17 09 2017].
community.cengage.com, 2017. An error occurred. – Cengage Resource Center. [Online]
Available at: community.cengage.com/GECResource2/info/b/bus_law?pi3030=5…pi3529…
[Accessed 17 09 2017].
cqpress.com, 2011. Business Ethics: CQR. [Online]
Available at: library.cqpress.com/cqresearcher/document.php?id=cqresrre2011050600
[Accessed 16 09 2017].
dailykos.com, 2011. There’s Privilege, There’s Insiders, and Then There’s the Goldman .. [Online]
Available at: https://www.dailykos.com/story/2011/8/26/1010707/-
[Accessed 17 09 2017].
epic.org, 2010. EPIC FCCvATT Brief_0.99 – Electronic Privacy Information Center. [Online]
Available at: https://epic.org/amicus/fccvatt/EPIC_FCCvATT%20Brief_final.pdf
[Accessed 17 09 2017].
governanceforstakeholders.com, 2017. ]Corporate Governance Case Studies – Governance For Stakeholders. [Online]
Available at: governanceforstakeholders.com/wp-content/…/CPA-CG-Case-Studies-Vol2-0410.pdf
[Accessed 17 09 2017].
Heskett, J., 2011. How Ethical Can We Be? – HBS Working Knowledge – Harvard …. [Online]
Available at: hbswk.hbs.edu/item/how-ethical-can-we-be
[Accessed 16 09 2017].
icsi.edu, 2014. ethics, governance and sustainability – ICSI. [Online]
Available at: https://www.icsi.edu/docs/webmodules/Publications/EGAS_04_Sep_14%20pdf.pdf
[Accessed 17 09 2017].
icsi.in, 2010. ethics, governance and sustainability sustainability – ICSI. [Online]
Available at: www.icsi.in/Study%20Material%20Professional/NewSyllabus/EGAS.pdf
[Accessed 17 09 2017].
ifc.org.wps.wcm, 2017. Who’s Running the Company? A Guide to Reporting on Corporate. [Online]
Available at: https://www.ifc.org/wps/wcm/…/Whos+Running+the+Company+Rev+-+Lo+Res.pdf?.
[Accessed 17 09 2017].
ijsses.org, 2017. Contemporary Financial Crimes of Employee Embezzlement … – IJSSES. [Online]
Available at: ijsses.org/wp-content/uploads/2017/03/140.pdf
[Accessed 17 09 2017].
Jennings, M. M., 2013. Ethics and Financial Markets: The Role of the Analyst – CFA Institute … [Online]
Available at: www.cfapubs.org/doi/pdf/10.2470/rflr.v8.n1.1
[Accessed 16 09 2017].
justice.gc.ca, 2017. Youth Risk/Need Assessment: An Overview of Issues and Practices. [Online]
Available at: www.justice.gc.ca/eng/rp-pr/cj-jp/yj-jj/rr03_yj4-rr03_jj4/rr03_yj4.pdf
[Accessed 17 09 2017].
kaloramapartners.com, 2012. Rebuttal statements Insider trading – Kalorama Partners. [Online]
Available at: www./…/2012-05-07-Insider-Trading-Debate-Rebuttal-Remark…
[Accessed 16 09 2017].
law.upenn.edu, 2017. Specialty Areas Research – University of Pennsylvania Law School. [Online]
Available at: https://www.law.upenn.edu/cf/specialtyareas/courses.cfm?Specialty_ID=1
[Accessed 17 09 2017].
Mittelstadt, B, 2017. Ethics of the health-related internet of things: a narrative review …. [Online]
Available at: https://link.springer.com/article/10.1007/s10676-017-9426-4
[Accessed 17 09 2017].
nejm.org, 2010. Sleep Deprivation, Elective Surgical Procedures, and … – NEJM —. [Online]
Available at: www.nejm.org/doi/full/10.1056/NEJMp1007901?viewType=Print&page=&sort..
[Accessed 17 09 2017].
network.bepress.com, 2016. Business Law, Public Responsibility, and Ethics | Open Access. [Online]
Available at: network.bepress.com/explore/business/business-law-public-responsibility-and-ethics/?.
[Accessed 07 09 2017].
pogo.org, 2011. Revolving Regulators: SEC Faces Ethics Challenges with Revolving …. [Online]
Available at: www.pogo.org › Our Work › Reports › 2011
[Accessed 17 09 2017].
scribd.com, 2010. Consultation Paper on the Draft Guidelines on Disclosure of Inside …. [Online]
Available at: https://www.scribd.com/…/Consultation-Paper-on-the-Draft-Guidelines-on-Disclosure-…
[Accessed 17 09 2017].
srz.com, 2017. Insider Trading – Schulte Roth & Zabel LLP. [Online]
Available at: https://www.srz.com/images/content/1/4/…/SRZ-2017-StateoftheLawandPractice.pdf
[Accessed 17 09 2017].
steptoe.com, 2012. 26th Annual National Institute on White Collar Crime – Steptoe …. [Online]
Available at: www.steptoe.com/…/26th%20Annual%20National%20Institute%20on%20White%20…
[Accessed 17 09 2017].
uk.pinterest.com, 2017. U.S. prosecutors drop two more charges against Rajaratnam’s brother. [Online]
Available at: https://uk.pinterest.com/pin/440438038531076822/
[Accessed 17 09 2017].
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download