Introduction Insider trading is a term that is teeming with negative connotations and surrounded by controversy. I mean, who can forget the scandal of Martha Stewart the homemaking hoaxer? Insider trading can be legal or illegal depending on the circumstances. However, my focus is not to discuss the legalities of insider trading. My aim in this essay is to define the concept of insider trading, discuss how it is regulated, describe the notion of business ethics, discuss how these principles apply to the concept of insider trading, outline ethical arguments surrounding insider trading and ultimately prove that the offence of insider trading is highly unethical.
The main arguments against it include making the market unfair to those outside of the firm, the potential for many investors to leave the market based on their perceived disadvantage, and the rightful duty to punish all those involved with scamming others. Although reasonable, these arguments are not necessarily correct. Insider trading actually benefits the economy as a whole by making stock prices more in equilibrium to their true value, it helps minimize potential losses to individual investors who want to buy, and the immense amount of resources is not worth trying to prove something that cannot fully be enforced. Maybe there should be some type of balance between legal and illegal insider trading. By making it completely legal, enforcing insiders to report or disclose that they are insiders may help the unfair and negative connotation insider trading is associated with.
No one came out and stop the action. All they did is to hide the truth and continued to cheat to the customers. III.Objection A. Objection to Virtue ethics The Enron company should choose to be honest to the customers and do not speculate their stock price to the public and investors. The Enron should not make fraud accounting make their financial performance clearly and correctly.
Insider trading has received a bad name in the recent decades. The popular press makes it sound as an evil practice where the people engage in are totally lacking of the ethical principles. Particularly all the articles have been written on insider trading that have been treated in the recent years as something as a wrongful act. The exceptions were drawn out by the work of Manne (1966) that people profit from the usage of the inside information such as the tax preparers use the expert knowledge of the tax law to save their clients from the excess money spent on the tax return preparation (McGee R. W., 2007). Arguments have been raised if insider trading is not a fraudulent act and therefore is it legitimate to legalise it?
Enron focused on maintaining the appearance of value rather than creating it, thus fostering a competitive and risk-tasking environment that promoted the use of unethical accounting practises. To further exacerbate the situation, employees that raised concerns over Enron’s management were demoted or fired hence creating a workplace full of distrust and paranoia, with no clear
These practices resulted in the creation of substantial accounting gains that offset the recognition of true, lies, economic losses, deception and unethical behavior. In order for their schemes to work, managers did not plan for the one factor that would ultimately expose their bad behavior, and the decline in Enron’s stock price. This paper will explain some of the transactions Enron managers created and the related improper reporting that kept losses off Enron’s financial statements. I’ll also discusses the ethical issues that allowed these schemes to thrive for so long before being exposed. I’ll try to provides a simplified overview of complex financial transactions, but the ethical violations are clear and easily understood.
The bankruptcy lead to criminal charges against Enron’s top executives. In 1987, two years after the company was established, Enron experienced its first crisis where they were on the brink of bankruptcy due to traders making bets on the oil markets. Also Louis Borget, one of the traders was also caught shuffling money into off shore accounts Kenneth Lay, the CEO, was informed by auditors about the wrong doings that was going on but he encouraged them to keep bringing in the money. The traders were fired after gambling away almost all of Enron’s money. Jeffrey Skilling was brought in by Lay under the conditions that Market
However, the UK Government insists its links with Enron have neither changed policy nor bought access to ministers. A second front of allegations emerged over Labor’s close ties with Andersen, Enron’s accountants, a company barred from government work for failing to prevent the DeLorean car company collapse. This ban was later lifted, which has caused the rise of awkward questions
Enron filed for bankruptcy and it was found that Arthur Anderson was also guilty of falsifying Enron’s accounts. Sherron Watkins had acted as an internal whistleblower. And the suspicions increased as Enron’s stock price increased. 3 # Scandal of WorldCom: It occurred in the year 2002. WorldCom was a telecommunication company.
Enron filed for bankruptcy on December 2, 2001 and left all the investors and retirees with worthless stock. Enron was charged with securities fraud, such as fraudulent manipulation of publicly reported financial results and lying to SEC. And Enron was one of Arthur Andersen Public Accounting Firm’s clients. In this article, I would like to be more concern in the auditing and accounting