Module 16 Ethics Activity Discussion
Discussion Instructions
To complete this discussion, you must make an initial post responding to the ethical dilemma questions. Please address all the questions in full and cite your sources. Secondly, you must respond to another student's post in which you further the discussion. Start by reflecting on the original post. You may ask further questions, comment on the strength of their reply, address information that is missing, or provide examples that correspond with the topic. Agreement with the initial response is not required, but responses should reflect be supported with analogies, examples, research, or content from the text. All students should respectful of differences of opinions.
Ethics Discussion
In late July 2017, senior management at Equifax, a U.S. credit-reporting company, discovered that hackers had stolen the personal data of more than 145 million U.S. customers, including names, birthdates, Social Security numbers, and driver’s license information. In addition, the hackers stole credit card information for more than 200,000 Equifax customers.
If that weren’t bad enough, reports soon surfaced that three top executives, including Equifax’s chief financial officer, sold close to $2 million in shares of company stock days after learning about the breach and more than a month before the company announced the data hack publicly. In a company statement, Equifax says the executives “had no knowledge that an intrusion had occurred at the time they sold their shares.” The day after the company’s announcement about the breach, Equifax’s stock dropped by double digits, and the Department of Justice opened a criminal investigation.
Less than three weeks after the public announcement, Equifax announced its CEO, Richard Smith, would retire, taking a multimillion-dollar payout with him—even after shareholders lost more than $5 billion in stock value after the data breach was acknowledged.
Ethical Dilemma: Is it legal for company executives to sell stock shares for financial gain when they know impending bad news will cause the stock price to plummet? Does this constitute insider trading?
Related Chapter Outcomes and Course Goals
This group assignment addresses the following course goals:- Demonstrate an understanding of the forces that shape the business and economic structure of the United States of America in a global marketplace and compare it to other economic systems.
- Describe the ethical, regulatory, and social environments of business.
- Discuss how finance and the financial manager affect a firm’s overall strategy.
- Identify the types of short-term and long-term expenditures firm's make.
- Identify the main sources and costs of unsecured and secured short-term financing.
- Discuss how securities markets help firms raise funding, and what securities trade in the capital markets.
- Distinguish when investors buy and sell securities and how securities markets regulated.
- Discuss the current developments in financial management and the securities markets.
Grade Value and Rubric
- This discussion activity is worth 15 points.
- The course discussion rubric is applied to this discussion