Conflict Of Interest Essay Samples
1. The conflict of interest, as Spitzer put it was that he was a player in the game he was promoting. A good analogy for what he did would be for a baseball player to bet on a gaming he is playing in—which is against the rules in major league basement. An investment banker, or a person who convinces investors to invest in certain stocks, should make their living off of these stock doing well. They should not make their living off getting commissions from the stock companies that they are convincing companies to invest in. Grubman’sobligation to his investors conflicted with his obligation to the telecommunication companies he had them investing in.
Psychologically speaking, this can lead to a number of conflicts within a person’s psychology that could lead to conflict because of conflicting obligations. There is something to be said here for the proverbs, “you can only serve one master, because if you serve two you will love one and hate the other.” Grubman was not making logically decisions about what were the best stocks to purchase. He was making decisions based on his obligations to companies. That was Eliot Spitzer’s conclusions, “But now, investors are questioning whether Grubman’s stock picks were compromised by his deep involvement with the companies he covered” (Elstrom, 2002). Grubman says that he honestly believes the stocks he picked were the right one, but he cannot claim that he put himself in a situation where his thought process was not beholden to a special interest. This is the same reason that politicians accepting donations from on interest tend to vote in favor of that interest which is paying the bills. When someone is paying you to “think” a certain way, it is impossible to think objectively.
2. The investors were hurt by this when the stocks took a dive and they lost money, while Grubman was doing fine from all of the commissions he received from the telecom companies. While the given articles do not go into details about who these investors were, some of them were most certainly small families who lost their hard earned money due to Grubman’s subpar stock picks. This makes this case unfortunate. The term “investors” is a blanket term, but the people it covers are real people who put their trust in the wrong place. 3. The fact that Grubman was able to do this, it is not a personal ethics problem. It is a systemic problem with the system that allowed him to do this. You can bet that while he was a high profile case, that there were many more investors doing this. Greed will always seize on opportunities wherever it finds them. These are the frequent complaints about stock brokers, that they are not honest people trying to help people invest, but greedy people trying to make a profit through whatever dubious means they can manage. 4. I would recommend that there be a full disclosure to investors about where a broker’s income is coming from. This would lead to a transparency where investors could see if they are “in bed” with the stocks that they are promoting. A further action that could be taken is to not allow brokers to make commissions from the companies that they are selling stock to.