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Risk analysis in investment decisions
Risk analysis in investment decisions
The role of ethics in financial management
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1. Comment on Leo’s ethics when assuring his friends and relatives that the investments he recommends can produce major rewards with virtually no risk.
I think Leo’s actions on how he handles this was poor, but not surprising. When reading the dilemma, it never states if Leo was a “reputable” stock broker. It only stated that he was Carlo’s cousin. Leo doesn’t know Sam, he probably didn’t really investigate the options that would have been best for Carlo.
2. What basic investing principle did Carlo forget in his desire to fund his daughter’s college education?
I would say Carlo forgot the 1st rule in investing, research before you invest. By doing this he could of found out, is the seller licensed, is the investment registered, how do the
In conclusion, Jordon Belfort has had a major influence on today’s world. Belfort changed the way that people today see Wall Street and the world of stockbrokers. He lived at the top of the food chain but fell back to being “pond scum” (“The Wolf”). He even proved to all that a successful life isn't always the most perfect. Belfort served his time and is even a motivational speaker now. Now, Belfort is an example of how drastically one’s life can change within minutes, days, months, or
“Bernie Madoff began investing in penny stocks in 1960, and due to his impressive work ethic, received several big breaks. The first of which was his father in-law loaning him $50,000 to invest, and soon after, Carl Shapiro, a man who made his fortune in women’s clothing gave Madoff $100,000 to invest on his behalf” (Collins 2011). With this kick-start, Bernie quickly began making a name for him, especially as he promised clients a guaranteed 20% annual return on investment. This, coupled with his firm’s adoption of the latest technology made them a tour-de-force in the investment world. But what makes his eventual downfall more interesting is that he was not just a crook, Madoff did manage a successful, and legitimate brokerage firm. To some extent, the credibility he earned from these legitimate busines...
...and Andrew Fastrow was placing small amount of money (also known as entities) into accounts with unusual names such as Jedi and Chewco. By disguising theses account they were never entered into the data systems (Velasquez, 2009). Therefore the money laundering scheme would not be easily discovered making the punishment unlikely and the reward higher and of more value. Furthermore since Kenneth was covering up the losses of the company and making investors and employees believe that the company was making profit instead drastically loosing. Kenneth knew that his investors and employees trusted him. And as long as he made it seem that the company was on the right path no one would become suspicious or question him. Therefore this allowed him to pick his target very well and plan out his entire scheme perfectly as those who fall into rational choice theory do.
“Most people in the U.S. want to do the right thing, and they want others to do the right thing. Thus, reputation and trust are important to pretty much everyone individuals and organizations. However, individuals do have different values, attributes, and priorities that guide their decisions and behavior. Taken to an extreme, almost any personal value, attribute, or priority can “cause” an ethical breach (e.g. risk taking, love of money or sta...
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.
Bernard Madoff had full control of the organizational leadership of Bernard Madoff Investments Securities LLC. Madoff used charisma to convince his friends, members of elite groups, and his employees to believe in him. He tricked his clients into believing that they were investing in something special. He would often turn potential investors down, which helped Bernard in targeting the investors with more money to invest. Bernard Madoff created a system which promised high returns in the short term and was nothing but the Ponzi scheme. The system’s idea relied on funds from the new investors to pay misrepresented and extremely high returns to existing investors. He was doing this for years; convincing wealthy individuals and charities to invest billions of dollars into his hedge fund. And they did so because of the extremely high returns, which were promised by Madoff’s firm. If anyone would have looked deeply into the structure of his firm, it would have definitely shown that something is wrong. This is because nobody can make such big money in the market, especially if no one else could at the time. How could one person, Madoff, hold all of his clients’ assets, price them, and manage them? It is clearly a conflict of interest. His company was showing high profits year after year; despite most of the companies in the market having losses. In fact, Bernard Madoff’s case is absolutely stunning when you consider the range and number of investors who got caught up in it.
Mackay, Tim. "The Ethics Of The Wolf Of Wall Street." Charter 85.2 (2014): 67.Web. 23 Mar. 2014.
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
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.
At the start of Wall Street, Bud Fox is young and insecure about the business world. Bud is a broker seeking new clients and offering second-hand advice regarding the buying and selling of stock. Bud was faced with a choice that would change his life. He was so sure he wanted to be involved with Gordon Gekko that he was willing to do whatever it took to be a part of his immoral scheme. It only took about five minutes for Bud to agree to give insider information about stocks to Gekko in order to become more lucrative and manipulative at the same time. Bud wants to sell him stocks, and hopefully one day be like he is. Bud is obviously desperate to d...
Being very smart and persuasive, through threats and or secret deals ?under the table?, they found ways to get their way, and win in any situation. In everything from controlling downsizing to manipulating stocks, these captains of industry have set a path that can be looked back upon as ingenious and very well thought and executed.
At the start of Wall Street, Bud Fox is young and insecure about the business world. Bud is a broker seeking new clients and offering second-hand advice regarding the buying and selling of stock. Bud makes a visit to Gekko?s office with a box of Cuban cigars on his birthday in hopes of winning him over as a client. He wa...
Wall Street in the 1980s had big competition among the brokers to make money in legal and illegal ways. Although, making money was easy and quick, but nothing can compare to Bud’s guilty feelings. Bud causes loss of
Shaw, W. H., & Barry, V. (2011). Moral Issues in Business (Eleventh ed., pp. 230-244).
The Bernard Madoff case focused on how Madoff had fooled his investors by paying them high returns out of their own money or that of other investors and didn’t engage in any effective activity to create a profit. Madoff had founded his firm, Bernard Madoff Investment Securities (BMIS), in 1960 with his savings from his lifeguarding career and borrowings from his father-in-law. Madoff’s firm continued to grow and had grown a reputation on Wall Street. Most of the major positions in his company were occupied by family members and his auditing was done by an unknown accounting firm which only had three staff members. Bernard Madoff was in charge of all major roles – he was the real sole decision-maker, the transaction executer, the assets manager,