...CH. 32 1. Know the term fiduciary in the context of agency, and the requirements of a fiduciary relationship. “the fi duciary relation [that] results from the manifestation of consent by one person to another that the other shall act in his [or her] behalf and subject to his [or her] control, and consent by the other so to act.” When used as a noun, it refers to a person having a duty created by his or her undertaking to act primarily for another’s benefi t in matters connected with the undertaking. When used as an adjective, as in the phrase fi duciary relationship, it means that the relationship involves trust and confi dence. 2. Know the criteria used by courts to determine a worker's status as employee or independent contractor. Why does this determination make a difference? How much control does the employer exercise over the details of the work? Is the worker engaged in an occupation or business distinct from that of the employer(If so, this points to independent-contractor,) Is the work usually done under the employer’s direction or by a specialist without supervisionDoes the employer supply the tools at the place of work? (For how long is the person employed? What is the method of payment—by time period or at the completion of the job? What degree of skill is required of the worker? ( 3. Know the 4 ways an agency relationship can be created. An agency relationship can arise in four ways: by agreement of the parties, by ratifi cation, by...
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...questions. First, would registration with the SEC be required for Dakota Gasworks securities? Second, Did Emerson violate Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5? Third what theory or theories might a court use to hold Wallace liable for insider trading? Finally, under the Sarbanes-Oxley Act of 2002, who would be required to certify the accuracy of financial statements filed with the SEC? Would registration with the SEC be required for Dakota Gasworks securities? Why or why not? Reliant Energy has registered securities and faces a takeover attempt, or third party tender offer, then the SEC’s tender offer rules will apply to the transaction. The filings required by these rules provide information to the public about the person making the tender offer. The company, Dakota Gasworks, is experiencing the takeover so they must file with the SEC its responses to the tender offer. These rules set time limits for the tender offer and provide some protection to shareholders. Did Emerson violate Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5? Why or why not? Moreover, Emerson did violate rule 10b-5 of the Securities exchange act, in where it protects against insider trading; which is the purchase or sale by person with access to information not available to those whom with those they deal or general traders. The person passing the information of the takeover, Emerson, violated this rule by passing information that wasn’t regularly...
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...The Gekko was used influence tactic to Bud in the movie. Such as influence tactic about the film is push pressure tactic, upward appeal, exchange, pull the inspirational appeal, pull the personal appeal, pull ingratiation, and pull conclusion. The first influence tactic type was pushed the pressure Bud. For example, Bud had a lot of responsibility. Gekko pressured him to find out insider information that he needed to make specific decisions. Without those information, Gekko was not happy because he didn’t generate money from it. The second influence tactic types were upward appeal. Bud’s didn’t report anything to his boss. Also, Bud provides Gekko some inside information. For example, Bud pitches him stocks, but is unimpressed. Desperate, Bud provides him some inside information about Bluestar Airlines. The third influence tactic types were exchange. When began Bud told to him inside information, so Gekko wants Bud to spy on British CEO. Because he wants to make big money, if Bud don’t want to join him. Bud will be lose anything. The four pull influence tactic types was inspirational appeal. Just like movies Bud always looked up to Gekko before even meeting him. He aspired to be as successful as Gekko was in Wall Street. Because of this, Bud was easily influenced to go against his father’s beliefs became of he will success from knowing inside information. Bud would stop at nothing to impress the one who inspired him. The influence tactic types were pulled personal...
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...1. Identify the ethical and legal issues of which Albert needs to be aware. There were many ethical issues within this case study. They included: * Albert and his wife took advantage of the “players” at the parties they attended. Seeping information from them while they were intoxicated. Soon both of them started to use this strategy to increase their profits and build upon their portfolios. * Albert and his wife used their uncle, a janitor to gain information from the law offices he cleaned to gain information on companies. With this information Albert and Mary had an inside track in the market. * Barry putting Albert or Mary’s trade before the client order, this is called spinning and is considered unethical. And you have Barry demanding insider information on several companies. * Mary used insider information from her father who worked for a major health care company to initiate a hostile takeover for benefits towards her portfolio and her selected friends and colleges. * Buy stock for boss and boss’s friends, and they’ll give him a bonus. The only legal issue I noticed was the emails that Mary received. 2. Discuss the advantages and disadvantages of each decision that Albert could make and has made. Many advantages were: * Due to the information that he received from the players and his uncle, Albert had inside information which helped him to become successful within the market. * Assisting Barry helped Albert get...
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...Memorandum To: Reader From: Date: July 11, 2014 Re: Violation of SEC Rule 10-b-5 of the Federal statue Summary Aquaman is president of a marine research company called "Underwater Leagues, Inc." On April 1, the research director of Underwater Leagues tells Aquaman that they've come up with "Oxygum," a means of breathing underwater by chewing a special kind of gum. Aquaman knows a great product when he hears it. He delays announcing the invention to the public so that he can buy all the stock he can get his hands on. He buys 50,000 shares of Underwater Leagues, at $10 a share. After the announcement, the share price skyrockets to $50 per share. a) If the shareholders bring a derivative action against Aquaman, what federal law should they accuse Aquaman of having violated (i.e., which federal statute)? b) Did Aquaman actually violate that statute? Explain. c) If Aquaman were found to have violated that statute, what remedy would the shareholders be able to seek (i.e., how much money would Aquaman be liable for. Issue First issue: (1) Pursuant to what federal statute would the shareholders claim Aquaman violated, and was he truly in violation of that statute? Rule Section 10(b) of the Securities Exchange Act, Rule 10b-5, 17 C.F.R. § 240.10b, prohibit any person, directly or indirectly, from committing fraud in connection with the sale or purchase of securities. 17 CFR § 240.10b-5 (2014) is entitled “Employment of Manipulative and Deceptive Practices...
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...AIG was at the center of the financial crisis and probably without AIG the subprime crisis would not be as severe as we seen. AIG was used as an instrument to fuel the housing boom. The AIG executives were running the financial product unit ethically but not efficiently. From the email communication one thing is apparent that the executive were very optimistic and they never priced in the risk effectively. The assumption that there will be no calls from counterparties to execute the credit default swaps related to subprime market were not unethical and may have been completely driven by the amount of revenue generated by the credit default swaps for the financial product division. The situation was unprecedented and except very few no one was able to predict the extent of the mortgage defaults in USA. There was lack of the risk assessment standards within AIG that is apparent from the communications. The person who was running the Financial Product division Cassano did very poor job for adapting to the changing market conditions. Again AIG could have limited the losses by pricing the credit default swaps correctly by integrating in it the changing market conditions. If we look at the conduct when it happened the situation did not seem like violation of ethical conduct. Back than when AIG was making big profits no one realized the post effect of the failure of these complex securities and AIG was one of the preferred investments due to performance of its financial product unit...
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...Martha Stewart Martha Stewart is an author, editor, and a homemaking advocate. Over the last two decades Stewart has held a prominent position in the American publishing industry. She was the author of several books, hundreds of articles on the domestic arts, editor of a national homekeeping magazine, host for two popular daytime television programs, and commercial spokeswoman for K-Mart (Wikipedia). At the height of her career, Stewart’s success came to an abrupt hault as she encountered many hardships that were responsible for her undesireable reputation and diminished trust in the business world. In December 2001 Stewart held 3,928 shares in ImClone, a New York-based biotech firm. On the morning of December 27, Aliza Waksal, the daughter of the firm's CEO, Sam Waksal, told Douglas Faneuil, the assistant to Stewart’s Merrill Lynch broker, Peter Bacanovic, to sell the ImClone shares in her account. Soon after, Sam Waksal's accountant tried to sell Sam's shares as well. Faneuil told Bacanovic about the Waksals' desire to sell, and Bacanovic quickly called Stewart, leaving a message that ImClone's stock was going to start trading downward. Stewart sold her ImClone shares on the afternoon of the 27th. The following day, December 28th, The Food and Drug Administration reported publicly that ImClone’s promising cancer drug Erbitux was not going to be approved. After the announcement, ImClone’s stock fell sharply and Martha Stewart saved around $45,000 by selling early (Henwood)...
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...controversial and sensitive disclosures for companies to communicate to investors. How your company handles these disclosures can make a strong statement to investors about your company’s transparency. The history of insider transaction disclosure on the Web illustrates companies’ sensitivity and reluctance to provide this information to investors. For years, regulators such as the U.S. Securities and Exchange Commission (SEC) tried to improve transparency around insider trading only to be blocked by heavy corporate lobbying. Eventually, it took massive corporate scandals and collapses in 2001 for the tide to turn against the business lobby. Finally, the SEC introduced rules forcing all U.S. companies to provide access to their insider transaction filings on their corporate websites starting in June 2003. The SEC also dramatically shortened the deadline for insiders to make their filings and made significant improvements to the EDGAR database to accommodate electronic insider reporting. Under the old rules executives had up to 41 days to file reports with the SEC. With the new rules, however, insiders have to file reports by the end of the second business day following the day on which the transaction is executed. Significant geographic differences in insider disclosure Regulators in several countries have followed the SEC’s lead, but with varying levels of effectiveness because most lack a central electronic repository like EDGAR. Consequently, insider transaction reporting is still poor...
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...Identify the ethical and legal issues of which Albert needs to be aware- The first ethical issue would be Albert and Marry taking advantage of the players of large organizations by getting them drunk to get information out of them. The second ethical issue is that when Marry lost her job Albert lost a lot of money in high risk markets with his father’s friend’s portfolios. These men were old and that was most likely their retirement fund. Another HUGE ethical and I believe legal issue would be that Albert used his uncle to gain access to law offices and gather information of certain clients and businesses. Mary also used information from her father to help another company take over the one he worked for. Using this insider information is an issue. Legal issues that they face are the emails that marry forwarded with obscene messages and images that caused her to lose her job. As well as Al dealing with blackmail from Barry to give him the IPO information, or else he’ll report him for spinning. Discuss the advantages and disadvantages of each decision that albert could make or has made- Although Alberts and Mary’s use of insider trading made them a substantial amount of money and enhanced their portfolios; it was still illegal and they could both lose their jobs. The same goes for the use of his uncles keys to gain access to certain law offices. A disadvantage from marry forwarding emails would be that she lost her job. The disadvantage of Albert giving into Barry’s blackmail...
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...Exchange Commission. For the purpose of this paper, a description of the Securities and Exchange Commission will be given. Further describing the regulations which will protect the public from fraud within corporations and what that represents in the Sarbanes-Oxley Act of 2002. The Securities and Exchange Commission The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation (SEC.gov, 2013). The SEC is the regulatory agency which governs securities markets and protects investors. It is a regulatory agency which oversees securities transactions, activities of financial professionals and mutual fund trading to prevent fraud and intentional deception (SearchFinancialSecurity.com, 2015). The SEC is composed of five commissioners, three of which may not belong to the same political party. The commissioners serve staggered terms of five years. The Divisions of the SEC The SEC consist of five major divisions. The Division of Corporation Finance ensures corporate disclosure of important information to the investing public (SearchFinancialSecurity.com, 2015). The Division of Trading and Markets governs a fair,...
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...disclosures made pursuant to the securities laws and other purposes (Jennings, 2012, p. 212). Provisions under SOX affected organizations’ processes and changed how financial information was released to the public. The act highlights the importance of information system controls by requiring management and auditors to report on the effectiveness of internal controls over the financial reporting component of the organization’s management information systems (Li, Peters, Richardson & Weidenmier Watson, 2012, p. 179). Activities and Issues covered under SOX Many issues and activities should have been handled ethically and resolved voluntarily prior to establishing SOX. Companies should have already established audit report standards and rules to protect internal and external stakeholders. A system of principles-based accounting for compliance with the securities law is another...
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...Company Analysis and Comparison: JC Penney (JCP) and Target (TGT) Becky Kennedy FINC 350 A Professor Mason February 1, 2015 JC Penney and Target are a huge presence in the retail industry. Both companies specialize in the sale of merchandise and service to consumers through retail stores and e-commerce. Target and JC Penney are companies that are part of an industry known for its competitiveness and few barriers to entry. They compete with other local, national and regional retailers for resources such as customers, employees, locations, merchandise, and other aspects of the retail business. Both companies have stores at several locations throughout the United States, with both company’s operating results depending on their ability to predict and respond to changes in trends and customer preferences by providing consumers with quality merchandise at competitive prices. Both companies face the same kinds of risks. The answers are in the way they are managed. The retail industry is risky with Target and JC Penney both struggling with issues resulting in lost revenue. Risks faced by companies in the retail industry most likely include competition, marketing, branding, employee/customer retention, supply chain management, financial management, data management and much more. Target suffered from a data breach at the end of 2013 that proved to be costly and they are still subject to investigations and private litigations costing them millions of dollars. JC Penney has suffered...
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...Executive Summary Cardinal Health is a Fortune 22 company known as the business behind healthcare in America. Cardinal Health helps pharmacies, hospitals and ambulatory care sites focus on patient care while reducing costs, improving efficiency and quality, and increasing profitability. Cardinal Health was founded in 1971 by Robert D. Walter, who initially opened a small distribution center in Columbus, Ohio. In less than ten years, the then-named Cardinal Foods became a prominent regional food distributor until branching into pharmaceutical distribution in 1979. That same year the company purchased a drug distributor based out of Zanesville, Ohio, and re-branded itself as Cardinal Distribution. The company re-branded itself a third time in 1983 while also going public. Following their NYSE debut, the company grew rapidly throughout the 80's and 90's with the acquisition of more than a dozen U.S. drug distributors. By 1991, Cardinal Health had reached revenues exceeding $1B. By 1994, Cardinal Health had established itself as a leader in the drug distribution business with a nationwide presence and annual revenues of approximately $6B. Today Cardinal Health boasts $100+B in annual revenue. Board Composition Cardinal Health's Board of Directors has remained mostly the same preceding and after Sarbanes-Oxley legislation. The Board is composed of independent industry experts within Healthcare, Technology, and Academic fields. Some of the organizations represented...
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...Stock Picking Skills of SEC Employees Shivaram Rajgopal Schaefer Chaired Professor of Accounting Goizueta Business School Emory University 1300 Clifton Road NE, Atlanta, GA 30030 Email: shivaram.rajgopal@emory.edu Roger M. White PhD Student in Accounting J. Mack Robinson School of Business Georgia State University Email: rwhite42@gsu.edu Preliminary and incomplete Comments welcome This draft: February 18, 2014 Abstract: We use a new data set obtained via a Freedom of Information Act request to investigate the trading strategies of the employees of the Securities and Exchange Commission (SEC). We find that a hedge portfolio that goes long on SEC employees’ buys and short on SEC employees’ sells earns positive and economically significant abnormal returns of (i) about 4% per year for all securities in general; and (ii) about 8.5% in U.S. common stocks in particular. The abnormal returns stem not from the buys but from the sale of stock ahead of a decline in stock prices. We find that at least some of these SEC employee trading profits are information based, as they tend to divest (i) in the run-up to SEC enforcement actions; and (ii) in the interim period between a corporate insider’s paper-based filing of the sale of restricted stock with the SEC and the appearance of the electronic record of such sale online on EDGAR. These results raise questions about potential rent seeking activities of the regulator’s employees. We acknowledge financial assistance from our respective...
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...INTRODUCTION AND SUMMARY I. 1 GENERAL RULES REGARDING THE TAXATION OF INDIAN TRIBES AND TRIBAL MEMBERS AND THE TAXING POWERS OF INDIAN TRIBES ................. 3 A. Income Taxation of Indian Tribes and Wholly Owned Tribal Corporations................ 3 1. Federal income taxation of Indian tribes and wholly owned tribal corporations ... 3 2. State taxation of Indian tribes ................................................................................. 4 B. Tax Treatment of Enrolled Members of Indian Tribes ................................................. 7 1. Federal tax............................................................................................................... 7 2. State tax................................................................................................................... 7 C. Taxing Powers of Indian Tribes .................................................................................... 9 D. Alaska Native Settlement Trusts................................................................................. 10 II. SELECTED FEDERAL TAX RULES AND ISSUES RELATING TO INDIAN TRIBES AND THEIR MEMBERS .................................................................................. 12 A. The General Welfare Doctrine .................................................................................... 12 B. Indian Tribal Governments Treated as States for Certain Purposes (sec. 7871) ........ 14 1. In general...
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