Reference no: EM13724251
Case Study - The Insider
A federal jury convicted a stock trader who worked for a well-known investment firm, along with two alleged accomplices, of insider trading. According to the indictment, the trader got inside information about pending mergers from lawyers. The lawyers allegedly browsed around their law firm picking up information about corporate deals others in the firm were working on. The lawyers would then allegedly pass their information on to a friend, who in turn passed it on to the trader. Such "inside" information reportedly helped the trader (and his investment firm) earn millions of dollars. The trader would then allegedly thank the lawyers, for instance, with envelopes filled with cash.
Things like that are not supposed to happen. Federal and state laws prohibit it. And investment firms have their own compliance procedures to identify and head off shady trades. The problem is that controlling such behavior once the firm has someone working for it who may be prone to engage in inside trading isn't easy. "Better to avoid hiring such people in the first place," said one pundit.
At lunch at the Four Seasons restaurant off Park Avenue in Manhattan, the heads of several investment firms were discussing the conviction, and what they could do to make sure something like that didn't occur in their firms. "It's not just compliance," said one, "we've got to keep out the bad apples." They ask you for your advice.
Design an employee selection program for hiring stock traders. Don't bother with the technical qualifications for the job such as accounting and economics. Your program should be designed to weed out the "bad apples". Identify the following:
Question 1: What screening test(s) would you use? Why?
Question 2: What questions would you add to the application form?
Question 3: Specifically how should candidates' backgrounds be checked?
Question 4: What questions should be asked of previous employers and references?
Question 5: What else would you suggest?
|
Describe the media outlet being pitched
: Pre-Pitch: Using one of the companies that you began developing in the Unit 2 Individual Project, create a story that you wish to shop to a media outlet. Describe the media outlet being pitched. Include information on its target audience (the media..
|
|
After-tax cash flows
: Find the PI. Cost of capital is 10.2%. The initial outlay is $256, 900. The following after-tax cash flows:
|
|
Describe the details of the eu complaint against google
: Describe the details of the EU's complaint against Google and describe the specific laws allegedly violated by Google. What are the specific actions (facts) undertaken by Google that allegedly violates the EU's laws?
|
|
Riskier stock exceed required return on the less risky stock
: Stock R has a beta of 1.3, Stock S has a beta of 0.8, the expected rate of return on an average stock is 13%, and the risk-free rate of return is 7%. By how much does the required return on the riskier stock exceed the required return on the less ris..
|
|
Employee selection program for hiring stock traders
: Design an employee selection program for hiring stock traders. Don't bother with the technical qualifications for the job such as accounting and economics. Your program should be designed to weed out the "bad apples". Identify the following:
|
|
Describe how you will link the image of the firm
: Describe how you will link the image of the firm and the event. Keep in mind that people attend events mainly because of a connection with the theme or topic, not because of the sponsoring organization
|
|
What would your portfolios new beta
: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.85. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and to u..
|
|
What is the companys cost of preferred stock
: Duggins Veterinary Supplies can issue perpetual preferred stock at a price of $54.50 per share with an annual dividend of $4.50 a share. Ignoring flotation costs, what is the company's cost of preferred stock, rps? Round your answer to two decimal pl..
|
|
What is the cost of external equity
: Mess man Manufacturing will issue common stock to the public for $40. The expected dividend and growth in dividends are $3.50 per share and 3%, respectively. If the flotation cost is 9% of the issue's gross proceeds, what is the cost of external equi..
|