Reference no: EM133359087
Sam recently graduated and was thrilled to accept a job on the team of a charismatic mutual fund manager at a large investment firm that manages billions of dollars in mutual funds and other investments for individuals, companies, universities, and public pension funds. Gordon, the charismatic manager, is one of the most successful fund managers at the firm. A few months after Sam started working at the company, Gordon invited him and other male co-workers in his group to his bachelor party. Their female co-workers were not invited. Sam agreed to go. On Friday, Sam, Gordon, and a group of their male colleagues took a flight to Miami on a private jet where they were picked up in a limo by several Wall Street traders with whom the company does business. The traders execute buy and sell orders for the mutual funds under Gordon's management. Sam knows that the traders are not the most competitive from the standpoint of the prompt execution of trades or cost, but they are friendly and have a reputation as great hosts. Sam also knows that mutual funds companies are barred by SEC regulations from accepting gifts from traders, since the choice of traders is supported to be governed by the best interests of the investors. There is also a self-imposed, $100 limit at the company on the value of gifts to employees. But Gordon and other co-workers have gone on other junkets paid for by traders in the past, so he assumes it's okey. Besides, he's already in Miami.
The Wall Street traders let everyone know how pleased they are that their company is hosting the party. Everyone ends up at a private harbor where they board a yacht. On board the yacht are several young women who are pretty clearly paid "escorts" or prostitutes. The yacht is stacked with fine food, alcohol, and drug ecstasy. After few hours, the yacht leaves the dock and cruises about half-mile offshore. A good time is had by all and some business deals are done with the paperwork to be done later.
When Sam gets back to town and is in the comfort of his own apartment, he begins to reflect on the past weekend. It was a great time, but he wonders what will happen if people outside Gordon's group find out. On Tuesday he has lunch with his colleague friend, Laura, who works for a traditional, "straightlaced," and "by-the-book" fund manager at the same firm. He tells her about the party, and asks what she thinks. Laura points out that it is clearly stated in the company code of conduct that legal compliance is expected, that taking gifts from traders is prohibited, and that violations should be reported to supervisors. She also reports that nothing like this takes place in her group at the firm. Sam points out that Gordon is his supervisor. He also points out that the same traders he partied with told him that they gave a senior executive at the firm hard-to-get tickets to sporting events like the US Open and the Ryder Cup on several occasions.
Discussion questions
- What, if anything, is ethically or legally objectionable about Sam's actions in relation to his work at the mutual funds company? Explain.
- Should Sam report the party to someone at the company? To the SEC? Why, or why not? Explain.
- Should Laura report what she had heard about the party to her boss? To someone else? Why, or why not? Explain.
- Using resources from previous chapter "Ethics as Organizational Culture," how would you characterize the ethical culture and ethics programs at this company? Explain.