Ethical Analysis - Term Paper Example

The board of directors is a group of individuals who are responsible for running an organization. They work closely with the managerial staff in order to create a strategic plan for a company. Due to their position the members of the board of directors are entrusted with information that can change the future of a company. In the situation depicted in the case study the board of director member wanted to take advantage of an investment opportunity based on privileged information. The actions of the board of director member are unethical due to the fact that the person was making an investment decision utilizing insider’s information.

Insider information can be defined as intimate knowledge or material non public information on the affairs, operation, or financial position of a corporation that will affect the market price of its publicly traded stocks (Businessdictionary, 2011). 2. If the board of director member wanted to invest $500,000 instead of $10,000 my decision would not change due to the fact that the person would still be making an investment decision based on insider’s information. If anything the fact that the board member is increasing his investment makes the act even more despicable.

The higher investment realized by the board member might alert the Security and Exchange Commission (SEC) of the illegal act committed by the board member. 3. If the board member decides not to buy the stock, but instead the member gives his brother a stock tip the action would still be consider unethical. The reason this scenario is unethical is because the family member would be benefiting from insider’s information. Under normal circumstances this person would not know the information regarding the status of the stock.

The only reason that the brother invested was because of the tip the person received. Gaining access to the information is not considered a crime, but it becomes a crime if the person uses the information to obtain a financial gain. References Businessdictionary.com (2011). Insider Information. Retrieved March 28, 2011 from http://www.businessdictionary.com/definition/insider-information.html