Ivan Boesky at an audience of students at the University of California, Berkeley once stated, “Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself (Homans, 2012, p.1)(Kay, 2003, p.1).” Greed was what lead Boesky to Insider Trading and ultimately huge illegal profits; the scam he created was hidden in plain sight. Boesky wanted everyone to believe that he was doing the world a service but he was actually stealing (Homans, 2012, p.1). According to the Encyclopedia of White-Collar Crime, insider trading is a securities fraud that involves the purchase and sale of a security while the purchaser has trusted or privileged information about the security unannounced to the public. The …show more content…
Debra Ross in the Encyclopedia of White-Collar Crime defined arbitrage as: “(1) a transaction that generates a risk-free profit; (2) a leveraged speculative transaction; and (3) the activity of engaging in either of the above two forms of arbitrage transactions (p. 31).” Boesky’s forte was trading stock in companies aimed for an acquisition or merger, and this type of enterprise is legal as long as the trade was based on public information of looming acquisitions. This case study will explore the life and crime of Ivan Boesky and those individuals who helped him. Boesky’s journey from a college dropout to a Wall Street executive is of a man obsessed with money and the lifestyle that it afforded. In the end, greed didn’t prevail, and many lives, laws, enterprises were impacted, often for the better. Ivan Boesky was born 1937 in Detroit where his father owned several bars, restaurants and delicatessens (Meserve, 2012). During his child hood, Boesky and his family lived in a nice Tudor-style house in an upper-middle-class neighborhood. Boesky’s parents were immigrants from Russia. Boesky worked hard in high school selling ice cream from a truck and would often break curfew of 7 pm imposed by his license. Boesky did attend Cranbrook for a couple years, but he did not graduate. Although Boesky’s did not get good grades, he was a fantastic wrestler; winning the school’s
When assessing the economic damage to due to Paul Thayer and those that he tipped off about the acquisition of Campbell Taggart, it should be noted that some argue that this kind of insider trading circulates information and forces the stock to its “true value.” If we assume this argument to be flawed, then part of Anheuser-Busch stock dip after the announcement was due to the insider trading and the fact Anheuser-Busch probably paid more to acquire its target. Thayer and his friends trade the Campbell stock for nearly a month before any public announcement of the merger. On July 27 nearly half the volume was insider volume controlled by those individuals who were in violation of rule 14(e)-3 (See exhibit 2). The increased volume might
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in
This episode of American Greed presents the subtle yet very dangerous white collar criminals, whose tactics lead to financial losses with harrowing effects. The criminal in this particular case, Mr. Steven Palladino, manages an ice cream store in his neighborhood of West Roxbury and as such is a widely trusted man. The trust he obtains be founded from having been born and grown here as well as having his entire family as the mascots for his fraudulent enterprise. Having studied finance and finally making his way successfully through college to become a registered stock broker, he makes use of his social status to start in the pursuit of a Ponzi scheme under the appearance of Viking Financial. On the flip side, his investors seem to have unwavering trust in him despite the location of his office, a small
SEC alleged that Mark Cuban violated misappropriate insider trading. To be qualified as misappropriate insider trading, an individual wrongfully obtains (misappropriates) inside information and trades on it for her or his personal benefit. In this case, Cuban actually traded his shares based on the material inside information he was told and saved him $750,000 in losses. Wrongful misappropriation means violation of a fiduciary duty.
The capacity for greed Bernie Madoff possessed was staggering; in fact, he was so proficient at luring in investors that his firm stole approximately $65 billion dollars and at one point Bernie Madoff was worth approximately $800 million (Lozada, 2010). The theory that best depicts this behavior is anomie, which dates back to 1591 as a blatant disregard for the law (Hagan, 2013). It is ironic to say the least that Merton’s theory of anomie first appeared in 1938 and viewed anomie as a phenomenon that occurs when attempting to achieve societal goals causes deviant behavior. An interesting fact is that Bernie Madoff was born in April of the same year (1938) that Merton summed up the theory of anomie that would define Bernie Madoff’s
Bernie Madoff began his career as an investment broker in 1960, where he legally bought and sold over-the-counter stocks not listed on the New York Stock Exchange (NYSE). From the 1960’s through the 1990’s, Madoff’s success and business grew substantially, mainly from a closed circle of known investors and friends through word of mouth. In the 1990’s Bernard L. Madoff Investment Securities traded up to 10 percent of the NASDAQ on any given day. With the success of the securities business, Madoff started an illegal money-management business, promising his investors consistent returns from 10-12 percent, unheard of returns at the time, which should have tipped off most investors that something was amiss.
The question before our society is not whether corporate crime is a victimless crime, rather the question is what should be done about it? Corporate crime doesn’t just do harm to the investors that can be unknowingly damaged by these crimes, it has a much more insidious nature to it as it has done harm on global scales. Corporate crime is almost a misnomer because many of these criminal wrongdoings are for the most part legal, when not taken to their ultimate conclusion. Society within the United States has been taught that the man in the brief case, yelling at other men in dark coats on the flow of the stock exchange are the smartest guys in the room. This paper will attack that idea on many levels, the first salvo will be
The word “fraud” was magnified in the business world around the end of 2001 and the beginning of 2002. No one had seen anything like it. Enron, one of the country’s largest energy companies, went bankrupt and took down with it Arthur Andersen, one of the five largest audit and accounting firms in the world. Enron was followed by other accounting scandals such as WorldCom, Tyco, Freddie Mac, and HealthSouth, yet Enron will always be remembered as one of the worst corporate accounting scandals of all time. Enron’s collapse was brought upon by the greed of its corporate hierarchy and how it preyed upon its faithful stockholders and employees who invested so much of their time and money into the company. Enron seemed to portray that the goal of corporate America was to drive up stock prices and get to the peak of the financial mountain by any means necessary. The “Conspiracy of Fools” is a tale of power, crony capitalism, and company greed that lead Enron down the dark road of corporate America.
We chose Bernard Madoff’s case because we thought that we could relate his case to many unethical behaviors. The analysis can be made on decision making and lack of ethical training which we think is an important topic to focus on this course.
William Morris’ Useful Work verses Useless Toil depicts work as centered on the idea that it must aid and give, not only to the worker, but also to the world and community around them. To Morris, work is “not far removed from a blessing, a lightening of life” (Morris, 1). Gordon Gekko, from Wall Street(1987) on the other hand, professes that good work is rooted in the pursuit for money. A notion exemplified in his “Greed is Good’ speech. The needs of himself triumph over the needs of the community leading him to do everything in his power to maintain this notion. Morris directly outlines and differentiates good work from meaningless toil, which is used as a guide to understand the characters portrayed in the movie Wall Street. Considering Useful
Insider trading is essentially the trading of confidential information that is basically sold to the highest bidder. David Hilzenrath, a journalist, describes, “Given the scope of the allegations to date, we are not talking simply about the occasional corrupt individual, we’re talking about something verging on a corrupt business model…” (Hilzenrath). Hilzenrath is suggesting that Wall Street as a whole is being deceitful and doing more than they are letting the public know. Insider trading is not a victimless crime, it takes advantage of honest investors. It is easy to stereotype the rich as greedy due to how they attain their wealth through power but the middle class can be just as greedy by trying to live vicariously behind a mountain of
For nearly two decades, three men were scamming millions of dollars with intelligence that they gathered from insider trading. Corporate attorney, Matthew Kluger, and stock trader, Garrett Bauer, were able to net over $37 million in 17 years. They were living the high life, until 2011 when authorities started getting suspicious of this activity.
In today’s society crime occurs everyday across all aspects of life. One particular crime is that of white collar and corporate level crime. It is important that we as a society study this type of crime in depth because many individuals believe that white collar and corporate level crimes are victimless crimes when in reality they have the potential to destroy major corporations and economies all with one single case. The news or media rarely talk about this type of crime because it is often difficult to understand and individuals typically lack interest in these types of cases. One particular case is that of Jordan Belfort. Dubbed the infamous “Wolf of Wall Street” Jordan Belfort is a former stockbroker who robbed investors of over $200 million dollars to create his wealth through “pump and dump” schemes, insider trading, money laundering securities fraud, and stock-market manipulation. As an attempt to further understand these complex cases I will break down Belfort’s case as far as the methods and means as to how he got started, his use of “pump and dump” schemes and other means as to how he acquired his wealth. In addition to this I will discuss the sanctions and disciplinary action that Jordan Belfort was given, how the case affected society and what new regulations were
This paper introduces Bernard L. Madoff a fraudster who orchestrated a multi-billion dollar Ponzi scheme. The paper discusses elements that make up a Ponzi scheme and explains what a Ponzi scheme is. The paper goes on to introduce some of the victim’s and examines some reasons why someone might fall victim to a Ponzi scheme. The paper describes the three elements making up the fraud triangle and how they relate to the fraud and the fraudster. This paper covers Bernard Madoff’s background and history and how he committed the fraud analyzing the fraud triangle. The paper describes ways to correct the issue, accounting principles violated, and recommendations for a fix. Finally, the paper looks at internal and external controls violated and ends with a conclusion.
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex, he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in