Ethics: Goldman Sachs

Orchestration of the fraud: Paul Mozer, Managing Director of Salomon Inc.’s government securities trading desk, submitted three separate bids for the U.S. Treasury’s $9 billion 5-year treasury note auction on Feb. 21,1991. Each of the bids was for $3.15 billion, or 35% of the total bond offering, the maximum bid the Treasury would recognize from any individual buyer. Since two of the bids were submitted under the names of outside firms who were Salomon

Q1 – What was up with Wall Street? The Goldman Standard and Shades of Gray.

And lastly the book discuses Goldman Sachs mortgage fraud. Goldman Sachs backed up $11 billion in mortgage loans even after knowing the loans were not a good idea. No one from Goldman Sachs informed regulators of speeding up the loaning process. The business had no consequences but one executive had to pay minor fines for misleading investors.

Unethical behavior…sounds bad doesn’t it? But what employee can truly say that he is completely innocent of any unethical behavior in the workplace? Some of the most common unethical business behaviors are fudging work hours, making phone calls on business lines and photo copying of personal paperwork. Simple acts such as these are highly unlikely to have an employee face criminal charges but when the acts of embezzling money or falsifying business records are committed a company is more apt to prosecute. People have different views regarding what is ethical and what is unethical. Some feel that it’s

When Ms. Stewart found out about the investigation, her first instinct was to lie and try to cover up the fact that her broker gave her before hand knowledge about the soon to be falling Imclone stocks. I believe this case and investigation was tried out in the media

Bernard Lawrence “Bernie Madoff” is an American former stock broker, investment adviser, non-executive chairman of the NASDAQ stock market, and the admitted operator of what has been described as the largest Ponzi scheme in history. (Bernard Madoff, 2011) This paper discusses the massive Ponzi scheme that Mr. Madoff created and those that were affected by it.

One of the activities that may be regarded to be in the gray area for Goldman is when the company created another company then bought 90% of the shares of the second company with its own money. Then without the knowledge of the public, Goldman wanted to buy a piece of the company. This meant that Goldman could sell the shares that they had bought in the company for a higher

In the case of Bernie Madoff this is perfect example of how unethical behavior can turn into corruption. Madoff, a former investment and stock broker, was formally introduced to the world as the 'sole' operator in the largest Ponzi scheme on record. Madoff turned his financial management company into a colossal Ponzi scheme that swindled billions, from thousands of his investors. In this paper we determine the regulatory oversight that was in place while the Ponzi scheme was operating, and speculate on the main reasons why they did not discover the scheme, we’ll look at investing in Madoff Securities and how to expose the potential fraud.

The biggest mistake the board of directors made was to trust a single man only because of his reputation. Just because Nick Leeson was reporting large profits, he was given virtually free rein and nobody had knowledge of his activity, when a trader on arbitrage strategies should not report such profits. The fact that Nick Leeson was reporting such profits should have been interpreted by the board of directors as a warning bell.

The investment bank Goldman Sachs sold BB rated collateralized debt obligation known as CDO’s and other “garbage” to individuals then betted against it because the investment bank knew they would default. If these investments did default, these banks would earn an enormous profit. The employees at the Goldman Sachs did not disclose to their clients they had adverse interests regarding what they were selling and in the end, it led to the financial crisis and multiple lawsuits against the bank. We believe the values of greed and reckless guided employee behaviour during the crisis, as Goldman Sachs employees continued to sell their products without regret until it was too late.

| #3 Paper- Case study: What is Up With Wall Street? The Goldman Standard and Shades of Gray

Buying influence or engaging in conflicts of interest: Goldman engaged in activities were the companies and their customers’ interest conflicted. Still they moved forward in making money off them. Also, although not specifically stated on the case, the fact many formers Goldman executives held government positions proved to be a conflict of interest itself. Some of those people still had strong relations within Goldman and it can be said that one way or the other Goldman took advantage of that.

The illegal construction of the Bernie Madoff securities pyramid scheme grew to preposterous proportions from legal, auditing, and regulatory weaknesses of the Securities Exchange Commission, the designated regulatory body of the U.S. financial markets. The required expertise, authority, and relevant penalties needed to deter management from committing ethical breaches lacked substance in the case study of BMIS (Crews 11). Even after the wake of the Enron and WorldCom scandals that occurred in the early 2000s, the SEC unexplainably revoked provisions created to help avoid fraud. The provision the SEC revoked specifically mandated firms structured like Madoff’s to be audited by accounting firms registered and audited by the Board. By revoking the provision, BMIS was allowed to continue its Ponzi scheme for another half a decade with the aid of utilizing an unregistered, small accounting firm called Freihling & Horowitz (“Madoff’s Jenga”

Main character in this fraud is Mr. Dennis Kozlowski, the CEO of Tyco. He misappropriated around $270 million through unauthorized loans, sale of Tyco securities and undisclosed compensation. In order to conceal these amounts, the compensation was incorrectly offset against unrelated gains. This led to violation of GAAP and misrepresented financial statements. For example, $44.6 million of bonuses were offset against gain from IPO of one of Tyco’s subsidiaries. They have also netted the bonuses with gain on disposal of business and gain on sale of common stock. According to ASC 718 Compensation, these and other bonuses should have been disclosed in operating earnings and should have decreased operating income. However, since they were offset against one-time gains, they did not have any impact on operating income. This “hiding” of compensation occurred on several occasions – the expenses were also netted against gain on sale

Wall Street's demand for high growth motivated Peregrine Systems' executives, to fraudulently inflate revenues and stock prices.  Peregrine apparently filed materially incorrect financial statements with the commission