Richard Strong and Canary’s use of marketing strategies brought out elements of unfairness. This occurred when Richard engaged in marketing timing of SCM mutual funds trade but was inconsistent with the company’s stated position on market timing and its treatment on other market timers. Canary’s elements of unfairness were depicted when he used late trading, which is an illegal activity where traders were permitted to place orders after the official 4.00 PM close of the market. As such, this reduced the returns of the other investors. These strategies could negatively impact long-term mutual fund investors and overall financial markets because of the large inflows and outflows, as well as, the trading and overhead costs involved. Consequently, if a fund manager has to sell stocks when the market timer withdraws funds, then this would trigger taxable capital gains for all fund investors. Also, if the market timer’s infusion of cash has not yet been invested in stocks, the earnings of the funds are due entirely to the money provided by other investors. Thus, the market timer contributes nothing to the holdings that generate fund’s revenues, and yet by putting millions into a fund for a day, then the market timer gets a portion for that return. These marketing strategies are unethical because their actions are determined by the consequences, which make the individuals engage in violations of the market. Based on the deontological theory of Kant, Richard and Canary fail to perform their duty as market timers, therefore, benefitting only a few individuals. This is immoral because they do not adhere to the laid down principles of market timing.
My argument is that Martha Stewart possessed inside information that she received from her broker. Inside trading is malpractice wherein trade of a company’s insecurities is done by people who by features of their work have access to the otherwise non-public information which can be crucial for making investments decision. Martha’s case differed from that of Texas Gulf Sulphur because she was found to be lying and was charged with conspiracy, obstruction of justice, and perjury. However, the Securities Exchange Commission did not find any evidence that would link Martha to receiving material of nonpublic information in violation of her fiduciary duty. The only information she received was that the members of Waksal family were selling their ImClone stock. Insider trading deprives investors who lack access to nonpublic information of receiving the full value of their insecurities and when the information becomes widely known before an insider trading takes place, then the markets would integrate that information and the securities in question would become more accurately priced as a result. From a utilitarian perspective, the act of insider trading is unethical given that it is not a right action, yet it does not produce good consequences that would favor the majority of the investors.
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