If It's Legal, It's Ethical; and Besides, Everyone Does It Essay

If It's Legal, It's Ethical; and Besides, Everyone Does It - Essay Example Group hedge-fund, Raj Rajaratnam obtained inside information through supporting the graduation parties of several young executives in major companies such as Intel. Arthur Anderson and Credit Suisse First Boston Corporation (CSFB) shredded documents that would be crucial in pending Enron investigations. The outcomes of such behaviours were costly legal suits by the SEC, loss of investor confidence in the industry (Jennings, 2012). Other executives were sentenced for long terms in jail. There are no disadvantages competitively if companies do not engage in the same behaviours as those of the industry. Companies that behave ethically will attain higher reputation and trust from clients thus gaining a competitive edge in the market. If firms do not follow the unethical industry behaviours, they will avoid costly suits by the SEC and gain market reputation (Jennings, 2012). Some of the negative consequences for companies that adopted industry practices include costly suits by the SEC, loss of investor confidence and bankruptcy. Such companies distorted the market prices and led to decline in the market capitalization since some investors sold their stocks below the issue prices in order to avoid further losses. If everyone in the industry is behaving unethically, it will not be difficult for one to be caught. The Securities and Exchange Commission constantly monitors the transactions of each financial identity after complaints of insider trading thus facilitating the identification of criminal and unethical behaviours. On the other hand, the SEC requires the suspected individuals to voluntarily assist in the investigation in order to qualify for leniency in the exchange of the insider trading and market manipulation testimony (Jennings,