Anam ShahEthicalDilemmaAn ethical dilemmain a corporate setting can stem from many problems, especially in the corporateworld today because of the different trainings regarding ethics that eachbusiness has.
One ethical problem in the financial corporate setting is insidertrading. Taking a look back in to the mid-1980s, Robert Foster Winans was aWall Street Journal column writer. He wrote the “Heard on the Street” column.He would profile a certain stock, take a position based on it, and write aboutit, essentially having his opinion published. The issue here was thatthe stocks would usually go up or down based on Winans column. Winans decided toprovide a certain group of stockholders this information before the Wall StreetJournal published his work into the column.
By giving the stockholders thecontent of his column, that group of stockholders was able to get ahead of themarkets in regards to that certain stock. Once the profits would come intothose stockholders, they would share the winnings with Winans. The SecuritiesExchange Commission (SEC) found about this and charged Winans and thestockholders with insider trading. Because it was the opinion of Robert Foster Winans, the SEC stated that it thecolumn was the property of the Wall Street Journal and the informationbelonged to it Now looking at this case, it can benoted that the main players in this case were Robert Foster Winans, the WallStreet Journal, the few stockholders that he was providing the information to,and the Securities Exchange Commission. The beneficiaries of this insidertrading were Robert Foster Winans and the stockholders. They were able to maketheir decisions on the stock based on the Winans’ information and reapthe benefits of making the correct decision. Winans was also benefiting becausehe was receiving a part of the money that the stockholders were making off it. Thereare a few ethical dilemmas that can be expanded upon.
A couple of these include societal values oninsider trading and inequality for market participants. Societal values make a large ethicaldifference. From this stand point, what Winans did was wrong.
As we discussedin class, there are rules to every society. The ones who make those rules arethe people who are the experts. In this case, the Securities ExchangeCommission decides whether an insider-trading situation is considered legal orillegal. Majority of the time, it isconsidered illegal and so they have considered it wrong.
To add on, the mediahas generally made insider trading a negative aspect in most cases. So, we as asociety have adopted this rule and see insider trading as being an ethicallyincorrect thing to do. Here, Winans saw an opportunity to have a personal gainand he took it. For him, from an ethical perspective he was seeing that hecould have more money putting out the same information. Instead of looking overthe societal morals, he chose to look at his own gain from his perspective.
In this specific case, the SEC chargedWinans stating that the content was owned by the Wall Street Journal. Thisraises the ethical question of if Winans was charged with insider trading andthe Wall Street Journal did the same exact thing, they would not be heldaccountable for sort of legal actions. This situation then becomes unjust. Itgoes back to the Harvard ethics article we looked at that states the goldenrule as a universal rule, but the newer rule of treating each individual of howthey would rather be treated. It is only fair for the same rule to applyethically if is wrong for one person, it should be wrong for the whole businessto do it also. As Robert McGee states”the underlying philosophical argument is fairness (11).
” If Winans is working 40 or more hours a weeklooking at those stocks, analyzing them to write in his column, isn’t it fairfor him to receive some sort of benefit for attaining that knowledge? No, it isnot in this case because he gave out the information to other stockholders aswell. Therefore, there is an unfair advantage to the other market participants.All the other stockholders were losing because they did not know whether thestock was going up or down. So, they had a risk that they were facing ofpossibly losing or gaining money based on their decisions. The stockholdersWinans notified did not have any risk they were taking because they werealready sure of whether the stock’s price was going to go up or down. McGheealso brings in Ricardo’s comparative advantage theory, stating that some peopleor individuals are naturally better than certain things than others (McGee). To avoid such dilemmas of whether anaction is ethically correct or incorrect regarding insider trading, there isthe obvious solution that employees should not engage in such action. InWinans’s case, if he fulfilled his duty as a writer in the column and used hisknowledge for his own shares if he had any in a stock and disclosed theinformation to SEC, he would not have been ethically correct.
He followed thelaw in regards to insider trading. The Wall Street Journal can also have atraining or information session of what insider trading is and when it isallowed/considered ethical and when it is not. If all of the information iscommunicated and the employee still deliberately takes part in what is wrong,then they have to face the punishment. Shareholders should also go through atraining because they are much more active in the market. The SEC also regulates the market to keep aneye on any illegal activities. Overall, to keep everything fair, ethicalstandards for each company should be clearly communicated. CitationsBeattie, Andrew.
“Top 4 MostScandalous Insider Trading Debacles.” Investopedia.9 Sept.
2017, www.investopedia.com/articles/stocks/09/insider-trading.asp.Harvard Business. “Ethics.
” Harvard Business Publishing. https://cb.hbsp.harvard.eduMcGee, Robert W.
“Ethical Issues in InsiderTrading: Case Studies.” By Robert W. McGee :: SSRN, 4 May 2004,papers.ssrn.com/sol3/papers.
cfm?abstract_id=538682Wenzel,Sara. “Insider Trading: What Would Rawls Do?” Sevenpillarsinsitute.org, sevenpillarsinstitute.org/case-studies/insider-trading-what-would-rawls-do/.