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Business Ethics And Practices Of Goldman Sachs

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Assignment 1
Q1 – What was up with Wall Street? The Goldman Standard and Shades of Gray.
Go back through the case; make a list of each action/ practice that could be called a gray area.
The problems to be investigated are the business ethics and practices of Goldman Sachs. There were several grey areas in which Goldman Sachs operated their business.

Ethical Grey areas are situations and problems that don’t fit neatly into any existing mode of ethical analysis within the business (Marshall, 2007). Peter Drucker’s interpretation of business ethics is that personal ethics and business ethics cannot be separated. He uses the example of businessmen should not cheat, steal, lie, bribe, or take bribes. But nor should anyone else. He also mentioned that “men and women don’t acquire exemption from ordinary rules of personal behavior because of their work or job” (Drucker, 1986).

The first grey area was Goldman Sachs using a technique called “layering”. Goldman would start a company and used their own money to buy 90% of the shares. The public would see how the stocks were selling so quickly and wanted a piece of the pie. The public were unaware that Goldman was buying their own stocks and then continuously increasing the price of the stock and selling it back at the higher price. Goldman saw how well this was working and decided to continue with this practice. He started new companies and followed the same formula as before, making bags of money, while investors had no idea
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