Reference no: EM133175945

Shelley, a regional sales director who had recently been promoted within a medium-sized financial services company, and whose business was conducted in over 15 countries, received some troubling email from corporate headquarters several days into her new job. Apparently, some of her staff, for which she is responsible, had given nonpublic stock information to a hedge fund manager, copied various documents, which arguable be called "trade secrets," and sent these documents to competitors via the Internet. The FBI has started an investigation into the matter, on criminal grounds, and now the SEC has made inquiries through some of its attorneys into the accuracy of the alleged activity. Such insider information, if the allegations are true about is transmission to outside competitors, would adversely affect the company's stock value, and would harm investor relations in the long-run.

Its reputation is stellar and many trade groups and experts recognize its executives and management as ethical leaders. Further, the public affairs department has been in contact with several government agencies about the impact of such allegations on the company's ability to secure sound investing from its stakeholders, in the event negative information and press results from these pending investigations. Just minutes ago, the SEC secured a subpoena that established that a disinterested party bought stock based on information provided by the hedge fund manager. This sale occurred five months ago. Answer the following questions in full and compete paragraphs:

1. What are the four cycles of a crisis, as demonstrated on the facts? Is this a crisis and, if so, what type? What should the company do to resolve this alleged crisis? Citing an example in the text, how have other companies dealt with such crises?

2. Discuss the CSR-2 and CSR-3 models in evaluating what this firm did to cause such a situation to occur. In your answer, discuss the three theories that may explain the firm's actions. In your answer, describe any legal issues present on the facts.