Shades of Gray (Ethical Behavior) Essay

1783 Words Oct 4th, 2012 8 Pages
The problem to be investigated is looking into shades of gray when it comes to ethical behavior. For years, companies have been operating within the law yet displayed very questionable behavior. Companies like Goldman and Sachs utilizing questionable trading techniques in order to gain a financial profit while leaving behind companies in the dust and eliminating hundreds if not thousands of jobs in the process. Ethics is more than doing what’s right or wrong. It’s a way of life and how we can have an effect on others.
Question 1: Go back through the case and make a list of each action or practice that could be called a gray area.
The Layering Strategy: This was formulated in the late 1920 as a way to utilize one company’s money to
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Involvement in Auction-Rate Markets: These securities that were touted as mutual-fund grades with a higher yield. Their clients would bid on securities being sold through a once-per-month auction that the investment firms were selling. What their clients did not know is that their own investment advisers were bidding up the value of the instruments. The prices were reset weekly based on the demand, but the investment firms were creating that demand through their bids, bids that they never intended to execute because their clients would always bid more.
Betting agent their own clients?: In January 2010, Goldman Sachs admitted that it often made recommendations to clients that it had already positioned itself to profit from. Goldman also pointed out that its memo read in part, “we may trade, and have existing positions, based on trading ideas before we have discussed those ideas with you.” The disclosure of Goldman client-contra positions had appeared in the fine print in Goldman’s marketing materials, but the memo represented the first time that Goldman had discussed it openly with its clients. Experts indicate that Goldman was disclosing its conflict as a way of managing client relationships and trading positions. One expert has noted that the way the markets have evolved, client and investment firm relationships are “laden with conflict of interest.”
The 2008 Bail Out: Goldman received $10 billion from the U.S.