PHI 2397 Lecture Notes - Lecture 10: Professional Responsibility, Walmart Canada, Harvard Law Review
4 Jul 2018
School
Department
Course
Professor
BUSINESS ETHICS CHEAT SHEET
FINANCE
Boatright, “Finance Ethics”, pp, 146-52
Financial market
- unfair trading practices (fraud)
- unfair conditions (unequal info)
- financial contracting (imperfect)
Financial services
- fiduciaries/agents (interest conflict)
- sales practice (twist,flip, PDAA)
- firms (reluctant negative analysis)
Financial management
- competing interest (personal gain)
- risk level (vs returns)
- hostile takeover
Glynn and Dowd, “Martha Stewart Focuses on Her Salad”, pp. 571-574
Billion Dollar Empire
Super successful at knowing her
audience, selling a lifestyle,
‘befriended’ her audience
Fraud
4000 shares in a drug company
before the FDA rejected that drug
which caused the drug stock to tank
Communication
treating her customers as ‘friends’
and appreciating them gained her
success even after she went to jail
Burton and Kishon, “How Raj Rajaratnam Gave Galleon Group Its ‘Edge’”, pp. 577-579
‘Edge’ Resulting Insider Trading
demanded ‘edge’ from his team to
know how to manage the funds
Robin Hood
very charitable man who donated
millions to help others
Largest case of insider trading
guilty of 13 frauds, 11 years in jail
Moore, “What Is Really Unethical About Insider Trading?”, pp. 152-159
Fairness
- unequal info (antique
ex.)
- unequal access to into
(plumbing ex.)
Property Rights in Info
- only unethical if firm prohibits it
- creates inventive & save $
Harm
- prices scale down to compensate for risk of
harm to ordinary investors
- law should not cater to people’s feelings
(investors loss of confidence in market)
Ferguson, “Wall Street Lays Another Egg”, pp. 169-177
Breakdown of Financial System
- cause of the crisis was ‘subprime
mortgages’
Lax Regulations on the Banks
- financial systems allowed banks to
grow their balance sheets 20-30
times larger than their actual capital
Fractional Reserve Banking
- certain amount of deposit they
must keep and bank can loan out
The Untold Story of How Canada Survived the Financial Crisis”, by T. Kiladze
THIS SHIT IS CRAZY HARD
Reference Re Securities Act
Purpose: single securities regulator
1. Protect investors
2. Have fair capital markets
3. Stability of financial system
How?
Regulations of derivatives,
amplified effects of subprime
lending crisis
Power
- federal: general trade & commerce
- provincial: property & civil rights
3 Articles
Ottawa
- favours a national regulator
- respects all of the province’s
decisions but hopes to work with all
of them to have a collaborative
path
Quebec #1
- argues no need to fix what’s
good
- think unnecessary gov’t need
- position: regulations of securities
under provincial jurisdiction
Quebec #2
- judge opinion is unconstitutional ⅘
- new council making province subject
to power of other province (bad)
- rights of province?
ADVERTISING
Galbraith, “The Dependence Effect”, pp. 329-333
Wants never end
(physical ->psychological) Wants in personality wants dependent on production of goods that
affect psychological and personality (ads/sales)
Hayek, “The Non Sequitur of the ‘Dependence Effect’”, pp. 334-336
Wants that signifies success/happiness Wants that produce feelings/emotions come from
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Glynn and dowd, martha stewart focuses on her salad , pp. Super successful at knowing her audience, selling a lifestyle, 4000 shares in a drug company before the fda rejected that drug which caused the drug stock to tank. Communication treating her customers as friends" and appreciating them gained her success even after she went to jail. Burton and kishon, how raj rajaratnam gave galleon group its edge" , pp. Edge" resulting insider trading demanded edge" from his team to know how to manage the funds. Robin hood very charitable man who donated millions to help others. Largest case of insider trading guilty of 13 frauds, 11 years in jail. Moore, what is really unethical about insider trading? , pp. Prices scale down to compensate for risk of harm to ordinary investors. Law should not cater to people"s feelings (investors loss of confidence in market) Cause of the crisis was subprime mortgages".
