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Is it unethical for a company like Goldman to permit its managers to trade on the company’s account (i.e., invest on the company’s behalf rather than an external client’s behalf)? If not, how should policies be designed to prevent conflicts of interest from arising between trades on behalf of the firm and trades on behalf of clients?

Respuesta :

henrydesanta

Answer:

yes. it is unethical. many malpractices such as,

  • possibility for theft,
  • insider trading,
  • short selling  
  • fraud

could arise as a result of this. only the highest authoritative figures like CEO or CFO should be allowed to do that with transparency and accountability.

Explanation:

Answer and explanation:

It is unethical for managers to trade on their own company's accounts. The main reason for that conclusion is that the company's interest is not always the same as the clients' expectations. Company representatives could use their position of insiders to take advantage of certain investment opportunities compared to investors who only depend on publicly available information.

Even if policies are set to prevent these types of activities, top managers will be always a step ahead of the company's moves because of their inherent decision-making role. Therefore, executives should not be allowed to trade on the company's account.

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