Do I have a tip for you: how to make a bundle of money ALMOST legally
by Silver- on February 9, 2015 - 6:36pm
Historically, in the investment world, some well-known “gurus” were able to beat the markets consistently. For a while, they were praised and admired for doing so. However, for most investment professionals, such returns were abnormal. The financial markets do not work on the uphill permanently. Therefore, it came at no surprise when the “gurus” were caught doing INSIDER TRADING. That was the only way they could achieve their spectacular returns.
Insider trading is the ability to receive sensitive information from an insider of a publicly traded company that will affect the price of the stock either upward or downward. The investment adviser who receives this information has the ability to act either sell or buy the stock before the public is informed of the changes. At this point, once this information is in the hand of the investment broker it becomes his or her decision to act upon it. In the world of financial services, that creates a moral dilemma. On the one hand, the code on deontology would disallow such practice; on the other hand, acting upon it usually means making a lot of profits for himself or herself at the expense of others. Those who adhere to their code of deontology would simply not act to profit of the information and ignore the given information. Furthermore, they would have to report to the authorities of such information. It is a question of justice and fairness where it becomes the duty of the investment broker to do what is just. He or she would have to make this decision knowing it will have an impact on his or her profits. However, greed takes over in some cases and it becomes difficult to resist making large amount of money in very short term. People who decide to act illegally act on teleological principles where the individual’s highest good also known as summun bonum is the accumulation of profit.
In the case of Mathew Martoma, a hedge fund trader, he has been found guilty in one of the biggest insider trading scandal in the US (Gustin, Business.time.com). He had agreed to pay back 1.8 billion dollars in fine and has lost his capacity to act as a trader for the rest of his life (Gustin, Business.Time.com). He will probably spend decades in jail. Essentially, for years, Martoma was trading illegally on inside information he was receiving from doctors who were involved in a pharmaceutical trial for an Alzheimer’s drug (Gustin, Business.Time.com). He is said to have been able to corrupt two of the doctors involved in the drug trial in order to obtain "advance notice of their results" (Gustin, Business.Time.com). In this particular case, two different professions have not respected their code of deontology and both to make illegal profit.
At the individual level, there is only one way to avoid this moral dilemma and it is called integrity, respecting the code of ethics and steering away from illegal offers. Therefore, choosing to follow deontological principles. It is true that in our society it becomes difficult to resist making a lot of money quickly and thinking you will never be caught, but it is in every individual’s hand to do what is right (in the code of ethics) and to realize that sooner or later the proper authorities will catch up.
Sam Gustin, Business Time, 2014. Web. February 7th, 2015. http://business.time.com/2014/01/10/heres-why-former-sac-trader-martoma-...