Finance Caselets: An Ethical Perspective

Abstract

These fictional caselets, some of which are based on lived experience, present dilemmas and ethical issues in the financial field. The situations include an investment-banking firm executive deciding how to handle an investment tip; an executive struggling with whether to push her tech start-up client to a lucrative IPO or to follow her company's directive to push a merger instead; an employee asked to contravene accepted accounting practice; an employee at a wealth-management firm pressured to promote two underperforming funds; a financial manager whose elderly clients unwisely want to liquidate a significant portion of their savings for a risky venture; and a fintech venture manager who is conflicted about the high interest loans his company offers. These caselets outline and convey the complexities and difficult choices that individuals in the world of finance often confront. Excerpt UVA-E-0472 Feb. 16, 2021 Finance Caselets: An Ethical Perspective The Value of Making Informed Decisions John was a rising midlevel executive at a major investment-banking firm and was progressing quickly through the ranks. He was quite satisfied with how he had managed his professional life so far. Aside from his work at the firm, John was also proud of the way he had turned his increasingly significant savings into solid investments, maintaining a diverse portfolio of stocks spanning companies of varying risk and sector profiles. Outside of his grueling 100-hour weeks (unreasonably high, even he had to admit), he kept up with the markets every day and spent several hours at the end of each month reviewing his portfolio and taking punts on stocks to sell and buy. He was disciplined about his process, and acted only when he was confident about his perspective. By maintaining this kind of system, he had managed to beat the relevant S&P benchmark indices on a regular basis over the last few years which, as a finance professional, he knew to be a difficult feat. Today was February 3, and John had just caught up over coffee with James, his close buddy from business school, after many years. As they had excitedly talked about their many triumphs in their similar lines of work, James, now a vice president at a private equity firm, shared that one of his big bets in the pharmaceutical space was about to pay off handsomely for his firm. Despite his firm's leadership team having been doubtful about the opportunity, James had pushed stubbornly for it and now the company was about to receive FDA approval for a new drug, which would send the stock price soaring. This would no doubt bag him a hefty bonus that he could put toward the convertible he had had his eyes on for far too long! As soon as he made this revelation, however, James became thoughtful and said, Wow, I can't believe I just told you that! A testament to how comfortable I feel with you even after all these years! Do promise me you will keep this to yourself. It's very hush-hush at this point! John had laughed and assured James that his lips were sealed. . . .