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Importance of code of ethics in accounting profession
Importance of code of ethics in accounting profession
Deontology ethics reflection
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Insider trading laws vary significantly from countries to countries. The conduct for the most part associates with illegal conduct. There seems to be general agreement in most countries that the practice is morally wrong. My opinion on insider trading from ethics of duty approach, also commonly known as deontological ethics, is that the practice is immoral. “Deontic” is defined as “of such ethical concepts as obligation and permissibility” and “designating the branch of logic that deals with the formalisation of these concepts”. This approach is based on the theory proposed by Immanuel Kant, and is referred to as a “non-consequentialist” approach which suggests that the locus of right and wrong of the action is not subject to the outcome of the decision, but instead the principle motivating the decision. London’s actions are in many ways an evident lack of ethics of duty. Ethics of duty suggests that decisions should be made by adhering to a set of rules or by fulfilling the individual’s duties. For Kant, to act out of duty is to act from reverence for the moral law. In this case, London neglected fiduciary duties to the client, public investors and business community at large. Where such duties subsist, it should act as both a moral and legal constrain or barrier to an individual acting in opposition to the interest of the firm. London has also breached the fundamental principles of a professional accountant that is clearly stated in the Professional Code of Ethics developed by the IESBA, explicitly the principles of integrity, objectivity, confidentiality and professional behaviour. He was honoured with the highest of trust by the firm and companies, of which was egregiously violated. Insider trading is also a clear form of vio... ... middle of paper ... ... full disclosure on information for all parties for a level playing field. And because gains fall inexplicably and illicitly to the primary stakeholders at the expense of the secondary stakeholders, insider trading is morally unacceptable and hence unethical. Insider trading carries several civil and criminal penalties, and from the abovementioned rationalisation, is conceived to be unethical and immoral. Every organisation should mandate confidentiality, and each employee is to be made understood that private information is lifeblood of the company. Access to sensitive information should be restricted and controlled. Insiders or top management level executives with advantaged information should be made to sign a non-disclosure agreement to acknowledge the basic tenet of not sharing information to safeguard integrity and interest of the employee and organisation.
Confidentiality has several different levels that include employee, management, and business information. Employee data includes personal identifying information, disability and medical information, etc. Keeping this material confidential is important because the information could lead to criminal activity to include fraud or discrimination; this can result in decreased productivity and affect employee morale. Management information covers impending layoffs, terminations, workplace investigation of employee misconduct, etc. It should go without saying that sensitive data should only be available to management. Lastly, the business portion includes business plans, company forecasts, and special ingredients/recipes, information that would not be readily available to competitors. Employees and managers should receive training on how to properly handle confidential information (Jules Halpern Associates, LLC,
Jeffery Archer is accused of insider trading with the shares of Anglia TV. Jeffery bought shares for the “inside information” of the companies dealing account, the day after the last board meeting but before the bid was announced. He should have known that even if he found out insider information from his wife the law makes it clear that he cannot deal or trade with that stock. It would be considered unfair to the rest of the shareholders, because other shareholders would not have the same information like Jeffery. As we know the buying and selling of shares must be based on public information
The seriousness of insider trading was not brought to light until some time after the stock market crash of 1929. This specific event can be summed up as a day where many investors traded around 16 million shares
This restrains the capacity of individual clients – or assailants – to achieve documents or parts of the framework they shouldn't get to. For instance, SCADA framework administrators likely needn't bother with access to the charging division or certain authoritative documents. Consequently, characterize the consents in view of the level of access each activity work needs to play out its obligations, and work with HR to actualize standard working strategies to expel organize access of previous representatives and contractual
In other words, its buying and selling of securities that has obtained non-public material information, and in Martha’s case she was guilty of it. “However in an interesting legal technicality, Martha Stewart did not necessarily breach a fiduciary duty to the other investors, since she had no real obligations to inform other investors, which would be the case if she were an officer with company (US SEC, 2009). This being said, if she confessed her actions were wrong, she would not have been convicted of insider trading. Insider trading can be either legal or illegal due to the nature and the timeframe. This was not the road that Martha Stewart decided to take. ‘She instead chose to collide with her broker in an attempt to barricade a story about how there was a standing order for Ms. Stewart to sell her shares” (US SEC, 2009). Martha Stewart had knowledge on the ethics surrounding trading of stock having already been a CEO, she should have known what she was doing, but one can argue that due to her crazy work life, she simply did no think about it. It shows that she is not engaging in illegal behavior. “Martha Stewart displayed her morality lies when lying to the US authorities even thought this was obviously illegal and unethical; her action can also be analyzed through egoism philosophy where right or acceptable behavior defined in terms of consequences to the individual, regarding maximizing self0interest” (Carr, 2002). Martha Stewart thought she did everything right, but still did not bother to warn the shareholders. If insider trading had not taken place, it would be less of a crime, but her actions indicated unethical behavior and define lack of integrity, and lying to Federal investigators only made it
Many other businesses may not want to do business as the company was involved with immoral behavior. The unethical business practices of the company will also gain exposure in the media and to the public (Nicol, 2015, n.p). Employees no longer keep unethical activities of the company to themselves. As a whistleblower, they may be perceived as a traitor, but in this case the senior executives are being traitors. They are taking money from immoral behavior and tarnishing the name of the company (Nicol, 2015, n.p).
Mr. Martoma worked for a company who invested a large sum of money into some stock. Martoma received inside information from a pharmaceutical company stating that the company wasn’t doing so well. Martoma reported this classified information on a private phone to his boss, because he thought it couldn’t be traced. Mr. Martoma actions were discovered and he was found guilty of insider trading.
Whereas, the actions of Sam Waksal, CEO of ImClone, were considered insider trading and illegal. Insider trading is when information is used to make a timely sale when the public doesn’t have access to the same information (Boatright, 2013). The law requires that if the information is considered important by a reasonable investor then it is illegal insider trading (Henning, 2012). Mr. Waksal knew about the FDA rejection of his company’s drug trial and tried to sell all his stocks before the public got a chance to review the same information and perhaps be able to execute similar sell orders.
Explain the connection between the economic model of corporate social responsibility and “free market” or “neoclassical” economic theory.
Insider trading has been a commonly discussed topic since Martha Stewart was accused, tried, convicted, and served a prison term for her involvement with the Inclon trading scandal. However, the definition of the term “insider trading” is not necessarily always connected with illegal activity. As a matter of fact, in some jurisdictions, “insider trading” is no crime. Traditionally, it has been an expected, and perfectly acceptable prerequisite for certain sorts of employment. ”(Insider Trading).
In the ever-changing world today, companies are continuing to innovate so they can maintain a competitive advantage. In order to keep their ideas secret, companies use legal documents called non-disclosure agreements or confidentiality agreements. Thousands of companies sign these contracts with other businesses and their own employees to ensure that current projects, innovative ideas, or new products are undisclosed from competitors. NDAs provide a level of protection and comfort when disclosing information to another party.
In the United States, the term executive compensation has many factors that have driven change in the landscape of executive compensation. Examples of those elements include the turmoil in commodity prices, market volatility, and political pressure for the reform of the executive compensation. Further, the executive compensation in the U.S. beats the average worker’s salary growth by a wider margin. However, when looking at the Sarbanes-Oxley Act which was supported by Paul Sarbanes and Michael Oxley represented a massive adjustment to the securities law. Further due to the Sarbanes-Oxley Act, publicly-traded and privately-held companies are obligated to implement and report in-house accounting controls to the SEC for compliance. Nonetheless, I will expand on whether executive compensation is ethical or unethical in the workplace, as well as if the Sarbanes-Oxley Act too strict or not strict enough as it relates to investors.
According to Carol Padgett (2012, 1), “companies are important part of our daily lives…in today’s economy, we are bound together through a myriad of relationships with companies”. The board of directors remain the highest echelon of management in any company. It is the “group of executive and non-executive directors which forms corporate strategy and is responsible for monitoring performance on the behalf of shareholders” (Padgett, 2012:1). Boards are clearly critical to the operation of companies and they are endowed with substantial power in the statute (Companies Act, 2014). The board is responsible for directing and steering the company. The board accomplishes this by business planning and risk management through proper corporate governance.
Insider trading can be defined as the purchase or sale of securities on the basis of information that has not been made available to the public (Miller & Jentz, 2011). There have been laws made to protect the public from being victims of insider trading. Insider trading gives employees of a company a trading advantage over the public and other shareholders (Miller & Jentz, 2011). The law is The Securities Exchange Act of 1934. The sections 10b and SEC 10b-5 were added to the law to prevent insider trading (Miller & Jentz, 2011). There are many cases of insider trading that can be traced back for centuries.
There are many lessons a business owner can learn from the Andersen/Enron scandal, the only lesson would not be that honesty is the best policy, but also that a dishonest action made by a few people can affect many. Enron’s insider trading and failure to report accurate earnings and losses paired with Andersen’s failure to properly audit and report the company’s debts and earnings made for one of the biggest scandals that the business world has ever seen. Enron used SPE’s or Special Purpose Entities to mask the large amounts of debt that they had acquired overtime