Brian Branigan is a new stock broker at a small brokerage firm, Fine Financial. Industry regulations require Brian to follow the Suitability Rule, Rule 2111. The rule requires that a “recommended transaction or investment strategy involving a security or securities is suitable for the customer” (FINRA, 2012). When working with his new clients, Clint and Carrie Cohen, Brian made an investment recommendation that abided Rule 2111, as it was a suitable fit for the Cohens, however, Brian had chosen this investment because it offered himself a higher commission. There were other investments that could have been a better fit for the couple, but Brian failed to recognize these other alternatives.
Fine Financial then started offering a mutual fund
…show more content…
“Brian told them that, “expenses are used to pay professional fund managers, who handpick the best stocks for the highest possible performance,” (Davis, 2013, p. 3) which was the standard response for Fine Financial. However, Brian also knew that this wasn’t entirely true. He learned in his college courses that there is no evidence that supports the idea of receiving a higher performance when a professional fund manager chooses stocks (Davis, 2013). Even though Brian knew the expenses were not likely to result in a better performance he told his clients anyway to abide by his company’s standards. With all of these ethical dilemmas present in this case, it seems that Brian is at fault for all of them, however, he is not the only one who contributed to these …show more content…
First, the clients, Clint and Carrie Cohen should have done their research and asked questions prior to purchasing the Fine Financial fund instead of after. As consumers, it is assumed that a stock broker will act in one’s own best interest, and is therefore trustworthy. However, this is not the case. Stock brokers are not required by law make recommendations that are best for the client, only that they are suitable. In addition, brokerage firms and their employees should not be paid on commission. When an employee gets commission for the sale of certain stocks, they are going to try to sell those stocks whenever possible, even if there are other investments that would be better for a client. This dilemma creates a conflict of interest. The employee must choose between what is best for their client or earning themselves or their firm more money. Unfortunately, the choice is often the latter. By eliminating the extra benefit of receiving a commission, stock brokers would have no incentive to choose an option other than what is best for the customer and would more likely make recommendations with altruism—“the motivation to help others, with no thought of oneself” (Goree, Manias, & Till, 2013). Lastly, FIRNA should rewrite the Suitability Rule to eliminate the obvious loophole that exists. Stock brokers should be required to recommend an investment, to their best ability, which is in their
Peter Sawchyn started Sawchyn guitars back in 1980 and he specialized in custom, handmade mandolins and guitars. When Peter was a teenager, he developed a passion for making guitars all while having no previous training nor desire to make them. During this time, he was able to make his very first guitar on his own. Peter, who is now a 57 year old lifelong entrepreneur, has gained a fair share of experience since his teenager days and is now known by many musicians all over the world. In the case, it explains that Peter also focuses mainly on sound quality and design rather than mass producing like other music businesses. There is no computerized machines to do the work, rather he does it all my ear and designs all his guitars
Jordan Belfort is famous for his crooked way of earning his millions as a stockbroker on Wall Street. Even Belfort started at the bottom, on his first day in Wall Street he was told he was “lower than pond scum”(Belfort 1). After writing a book about his happenings on Wall Street, we’ve seen the
As we have learned in this class unethical tactics are frowned upon in the business world and once these accusations are proven true, it is very hard to do another deal in the future. Bud Fox should have stuck to the principles that his father taught him and walked out of the room immediately. He should have created a BATNA because in his line of work there are many other large clients that do not act like Gordon Gekko. Bud Fox was too honest and too trusting with Gordon Gekko, a man who he just met and it ultimately ruined his life later in the
The legal system is considered a place where justice is served and criminals are sent to prison. However, this is not always the case, as seen with Robert Baltovich, who suffered a serious miscarriage of justice. Baltovich was accused and unfairly convicted for a murder that he did not commit. The investigation into the murder of Elizabeth Bain was unfairly skewed to gain a conviction against Baltovich. The bias against Baltovich, in the murder investigation, and his subsequent trial was a disservice to him and to Canadian society.
Two individual employees wanted to complete their assignment for their company. But, did their strategy go about accuracy? Karel Svoboda works for Rogue Bank. Svoboda is a credit officer who needed Alena Robles, independent accountant, assists to evaluate and approved his employer’s extensions of credit to clients. In order to complete the task, Svoboda needed to access the nonpublic information about the clients’ personal information related to the company such as their profits and performances. Instead of appropriately following the company policy, Svoboda and Robles created a plan to utilize this data to exchange securities. According to their plan, Robles exchanged the securities of more than twenty unique organizations and benefitted by
Vanguard Case Analysis After reading through the Vanguard case, there were a few difficult forks in the road that Vanguard seems to be facing. The company’s future can be greatly affected by some of these difficult choices. Vanguard has to decide whether to change their investment offerings, further develop Internationally, or to simply advertise to increase their client base. Top managers at Vanguard have to step up to the plate and rollout detailed plans as to what path the company should take regarding some of these issues. Through our in-class discussions, the majority of the students argued on one major problem that Vanguard was facing.
Jordan Belfort starts off his first day on Wall Street eager to make it to the top, only to be told he is nothing more than lowly scum by Thomas Middleditch’s character. Mark Hanna takes Jordan out to lunch later that afternoon to show him the “real” way of making money. Mark explains that there is only two ways of being a stockbroker without losing your mind, and that is with cocaine and prostitutes. Mark incepts that making money is the only goal one should have. He tells Jordan that his only objective is to move money from the client’s pocket to your pocket. Jordan is first hesitant about cheating his client’s money away from them, but puts his skepticism aside and joins in on Hanna’s power chant. Jordan faces an internal conflict similar to what many have felt; should I choose to make money even if I know my actions to obtain that money is morally wrong? Like Jordan most people selfishly continue to make money, and push away their morals aside.
Corporate executives like Kenneth Lay and Martha Stewart were taken before the court for poor ethical practices. Leaders of pharmaceutical companies have been found knowing about distribution of unsafe products. Leaders at Coke Cola were found guilty of racial discrimination and leaders of cruise ships fined for dumping waste in the ocean. News reports exposed Wall Street analysts who created phony reports, made profits, and pushing worthless stocks, left citizens questioning if they should invest their money. Leaders of the world’s largest retailer, Wal-Mart, were cited for practices of employee abuses and gender discrimination.
Ponzi schemes are a continuing problem in the investment world and can only be stopped if the Securities and Exchange Commission does better safe guarding investors’ money. This paper will address Bernie Madoff’s Ponzi scheme and how he was able to steal billions of dollars from investors. The reasons why the SEC responded so slowly to Bernie Madoff’s Ponzi scheme, and what can be done in the future to make sure another Ponzi scheme of this magnitude does not happen again. Also included in this paper will be examples of good and bad leadership theories.
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm (A&E Networks Television). Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.
Whether this was deliberate or willful blindness Avellino and Bienes were not innocent in their actions. They allowed money to cloud their judgement and didn’t ask important questions. They knew they were misleading investors but as long as they got a fat pay check didn’t care about the people they were lying to. Bienes knew that he should have been licensed and that investment advisors need to register with the SEC. But, he admitted to asking Madoff about it and being told not to register or get licensed. So, shouldn’t this have raised a red flag that something wasn’t right? If everything was legal why wouldn’t you want to register or get yourself licensed? These are just a few questions I think anyone would ask but Bienes and Avellino chose to leave them unasked in order to keep making easy money. Bienes admitted to paying millions on a house and famous paintings and doing very little for the money he was making. All he had to do was dupe people out of their money and he would continue to live a life of luxury. Later when Avellino and Bienes had to shut down their small investment firm, this didn’t even show up as a blip for Madoff to stop his shady business
This case study is not about Ms. Stewart direct participation with illegal insider trading as the media had steered the public to believe. To begin, Ms. Stewart received a phone call from Ann Armstrong, her assistant, stating that Peter Bacanovic, her stockbroker, “thinks ImClone is going to start trading down.” (Arnold, Beauchamp, Bowie, 2013, p. 390) Although Ms. Stewart was not able to get a hold of Peter, she talked to his assistance, Douglas Faneuil,
Weld, L. G., Bergevin, P. M., & Magrath, L. (2004). Anatomy of a financial fraud. The CPA
The stock market is an enigma to the average individual, as they cannot fathom or predict what the stock market will do. Due to this lack of knowledge, investors typically rely on a knowledgeable individual who inspires the confidence that they can turn their investments into a profit. This trust allowed Jordan Belfort to convince individuals to buy inferior stocks with the belief that they were going to make a fortune, all while he became wealthy instead. Jordan Belfort, the self-titled “Wolf of Wall Street”, at the helm of Stratton Oakmont was investigated and subsequently indicted with twenty-two counts of securities fraud, stock manipulation, money laundering and obstruction of justice. He went to prison at the age of 36 for defrauding an estimated 100 million dollars from investors through his company (Belfort, 2009). Analyzing his history of offences, how individual and environmental factors influenced his decision-making, and why he desisted from crime following his prison sentence can be explained through rational choice theory.
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex, he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm. Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.