Bobby’s Bagels just landed a contract to open 100 new stores in shopping malls across the country. The new business should triple the company’s profits. Prior to disclosing the new contract to the public, top managers of the company quietly bought most of Bobby’s Bagels stock for themselves. After the discovery was announced, Bobby’s Bagels stock price shot up from $7 to $52.

Requirements

1. Did Bobby’s Bagels managers behave ethically? Explain your answer.

2. Who was helped and who was harmed by management’s action?