Ethics
melissa thomas
RES/351
June 16, 2013
Tracy Sipma
The following is a summary of unethical business research conduct by Citigroup Inc. and subsequently resulting in trial proceedings for the unethical conduct. The summary will reveal the specific unethical behavior and who were the injured parties in this misconduct. Additionally, insight into how the unethical behavior affected the organization, the individuals, and society. Finally, evidence will be show how this unethical behavior could have been avoided or at a minimum resolved early in the research process.
What unethical research behavior was involved?
In 2002, Citigroup Inc. was accused of misleading investors. This misconduct was accomplished by the organizations’ research divisions with pressure from the investment sections within the company. The research analysts used biased research to promote the sale of stock that research had shown was not a good investment. The analysts misrepresented the legitimate research because of concern over from backlash from the organizations’ investment bankers. Additionally, the internal pressure from the investment sections to accomplish this misrepresentation was met the reward of bonuses and stock options for the research analysts. The end game in this misrepresentation was to ensure Citigroup, Inc. would have a better bottom line. Numerous examples illustrate the organizations viewpoint of increased profits were more important than a commitment to fair and accurate reports and recommendations by analysts (Di Lorenzo, 2006). The following communication demonstrates the openness of the misconduct among Citigroup and their associates. According to Di Lorenzo (2006) “At Salomon Smith Barney, analyst Grubman reiterated a stock buy recommendation in February 2001 on Focal, an investment banking client, and a target price of $30 (twice the stock price)” (p. 780, 781). Additionally, according to Di Lorenzo (2006) “In April
RES/351
June 16, 2013
Tracy Sipma
The following is a summary of unethical business research conduct by Citigroup Inc. and subsequently resulting in trial proceedings for the unethical conduct. The summary will reveal the specific unethical behavior and who were the injured parties in this misconduct. Additionally, insight into how the unethical behavior affected the organization, the individuals, and society. Finally, evidence will be show how this unethical behavior could have been avoided or at a minimum resolved early in the research process.
What unethical research behavior was involved?
In 2002, Citigroup Inc. was accused of misleading investors. This misconduct was accomplished by the organizations’ research divisions with pressure from the investment sections within the company. The research analysts used biased research to promote the sale of stock that research had shown was not a good investment. The analysts misrepresented the legitimate research because of concern over from backlash from the organizations’ investment bankers. Additionally, the internal pressure from the investment sections to accomplish this misrepresentation was met the reward of bonuses and stock options for the research analysts. The end game in this misrepresentation was to ensure Citigroup, Inc. would have a better bottom line. Numerous examples illustrate the organizations viewpoint of increased profits were more important than a commitment to fair and accurate reports and recommendations by analysts (Di Lorenzo, 2006). The following communication demonstrates the openness of the misconduct among Citigroup and their associates. According to Di Lorenzo (2006) “At Salomon Smith Barney, analyst Grubman reiterated a stock buy recommendation in February 2001 on Focal, an investment banking client, and a target price of $30 (twice the stock price)” (p. 780, 781). Additionally, according to Di Lorenzo (2006) “In April