CHAPTER 3

G b duplicity a customer who stages an accident and

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Unformatted text preview: ociated with a person who knows right c. Guile from wrong but uses tricks to obtain an unfair advantage. advantage 39 ETHICAL ISSUES AND ETHICAL DILEMMAS IN BUSINESS DILEMMAS K. Financial Misconduct K. Financial 1. The failure to understand and manage 1. ethical risks played a key part in the ethical financial meltdown and recession of 2008financial 2009. The global recession was caused in part by the financial The industry refusing to take responsibility for its decision to make excessively risky decisions, often without the to often knowledge of investors and other stakeholders. knowledge 40 ETHICAL ISSUES AND ETHICAL DILEMMAS IN BUSINESS DILEMMAS 2. Corporate cultures in many firms were built on giving 2. rewards for taking risks. rewards 3. Subprime lending and executive compensation in 3. Subprime executive poorly performing or failed firms are two areas of ethical concern that emerged out of the most recent recession. Such concerns led to the call for additional legislation such as Such the U.S. Dodd-Frank Act. Dodd-Frank 4. Top executives are ultimately responsible for 4. Top decisions made by the employees of their companies. decisions Regulatory systems in place failed to catch the systemic risks Regulatory failed that were at play during the financial industry meltdown. 41 that ETHICAL ISSUES AND ETHICAL DILEMMAS IN BUSINESS DILEMMAS L. Insider Trading - An insider is any officer, director, or L. owner of ten percent or more of a class of a owner company’s securities. company’s 1. There are two types of insider trading: legal and 1. illegal illegal a. Illegal insider trading is the buying or a. Illegal selling of stocks by insiders who possess material that is still not public. material b. Legal insider trading involves legally b. Legal buying and selling stock in an insider’s company, but not all of the time. company but Insiders are required to report their trades Insiders within two days of the transaction. within 42 ETHICAL ISSUES AND ETHICAL DILEMMAS IN BUSINESS DILEMMAS M. Intellectual property rights involve the...
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