Business Value and Ethics

REAL-LIFE SITUATION* Albert Chen was sweating profusely cars, joined the right clubs, and ate at the righn in his Jaguar on the expressway as restaurants with the right people. They also took the he thought about his options and advice of others, which was to identify the "playen" the fact that Christmas and the Chi- oflarge corporations at parties and take mental note nese New Year were at hand. He and his wife, Mary, "You'd be surprised at what information you hees who were on their way to meet Albert's parents at with a little alcohol in these people," said one broket New York's John F. Kennedy Airport, seemed to be Both started using this strategy, and five months late looking up from an abyss, with no daylight to be their clients began to see significant profits in theif seen. Several visits and phone calls from various peo- portfolios. ple had engulfed both him and Mary. Their good luck even came from strange place, He had graduated with honors in finance and For example, Albert had an uncle whose work as a had married Mary in his senior year. They had both janitor gave him access to many law offices that had obtained prestigious brokerage jobs in the New York information on a number of companies, especially area, and both had been working killer hours to de- those about to file for bankruptcy. Mary and Alben velop their accounts. Listening to other brokers, both were able to use information provided by this unde had learned that there were some added expenses to to benefit their clients' portfolios. The uncle even their professions. For example, they were told that had some of his friends use Albert. To Albert's sur. brokers need to "look" and "act" successful. So Al- prise, his uncle's friends often had nest eggs in excess bert and Mary bought the appropriate clothes and of $200,000. Because some of these friends were and men. t jast denit care for it." Hecwive both of them were carning goost woch in the company for which Maryis father feplicd. and then measure how wide the line is so that we them, " was her responve. Low how far we can go into it, " Was a commen te- them, Was her recponic. math at the brokerage firm. just fired for doing that at a big, firm last week;" said with a major health-care company, commented that Albert. ahe management team was running the company into ing Mary the sebel weck later the people who were sendthe ground. -If only someome could buy the com- was also asked to sec the head other atsose tired. Mary. pany and pur in a good management team, " he she came to his office, he said, - Please shat the lexe, gewed. Affer the corversatioa, Mary investigated the Mary. I have some bad news: 1 kiowe the dooe, campany and discovered that the stock was grosily weren'r imolved with what was happening with apdervalued She made a few phone calls and found e-mail scandal; however, you did forward mestithe come the byement-bysiking, if necessary and wel. Mary totd sereral of As things started to mer best chents, who in rurn did of going to another firm with the very w toll several of her best clicnts, who intura did of other your Albert soon bept drawing bigger clicnts. stock offerings (IPOs) of new companies. Occasion- To cxaccrbate the satuation, Albert's parents ally, when Albert saw a very hot IPO, he would talk were flying in from the People's Republic ot China. to some of his best venture-capital friends, who then . They were not happy with Albert's marriage to a botght the IPOs and gained some very good retums. White woman, but they had consoled themselves that This strategy helped attract some larger players in the Mary had a good job. They had also said that if market. By this point in his young carcer. Albert had things should go badly for them in New York, they made a great many friends. could always come to the parents" retirement home One of those friends was Barry, who worked on in Taiwan. However, the idea of leaving the United the stock floor. As they were talking, Barry men- States, attempting to-learn Mandarin, and raising ioned that if Albert wanted to, he, 25 a favor, when children in an unfamitiar culture did not appeal to lacing orders to buy shares, would occasionally put . Mary. lbert's or Mary's trade betore the client order. Albert was also having some problems. Becaus The first sign of trouble cane when Mary told their income was cut in half, Albert tried to make u bert about what was happening at her office. "1'm for the loss by trading in some high-risk marken tting e-mail from some ot the brokers with off- such as commoditics and precious metals. Hioweve QUESTIONS EXERGISES 1. Identify the ethical and legal issues of which Albert needs to be aware. 2. Discuss the advantages and disadvantages of each decision that Albert could make and has made. 3. Identify the pressures that have brought about these issues. *This case is strictly hypothetical; any resemblance to real persons, companies, or situations is coincidental