Question
Sue Perman and Ted E. Baer are both professional brokers whose clients own shares in U -S-Eh Incorporated. The share price of this stock keeps
Sue Perman and Ted E. Baer are both professional brokers whose clients own shares in U -S-Eh Incorporated. The share price of this stock keeps falling so they devise a strategy to help raise the share price. Once achieved, they plan to sell their clients positions for a profit. Ted recruits some of his friends and they begin discussing the company on the internet: it is a takeover target, future earnings are going to be much stronger than expected and other unsubstantiated rumours. After Ted begins his campaign, Sue begins to aggressively buy and sell the company in some (but not all) of the accounts that hold these shares in order to increase the trading volume. She did not discuss this approach with the client(s) beforehand. She justified this by saying that the clients still kept the same positions they had overall, and she only charged 5% of her regular commission fee so there was no harm done. A. Please state and explain at least 2 ethical problems with the above scenario. Make sure to state which of the 7 Standards of Professional Conduct were broken (you can simply refer to them by number). B. What should Sue and Ted have done instead?
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