Business Ethics: The Goldman Standard And Shades Of Gray

The first grey area was Goldman Sachs using a technique called “layering”. Goldman would start a company and used their own money to buy 90% of the shares. The public would see how the stocks were selling so quickly and wanted a piece of the pie. The public were unaware that Goldman was buying their own stocks and then continuously increasing the price of the stock and selling it back at the higher price. Goldman saw how well this was working and decided to continue with this practice. He started new companies and followed the same formula as before, making bags of money, while investors had no idea

Under this task I will explain the ethical issues that business needs to consider in its operating activities and how a business they could improve the ethical of their operations and also I will evaluate the influence of stakeholders exert in one company.

Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2013). Business ethics: Ethical decision making and cases [9th edition]. Mason, OH: Cengage Learning. Retrieved from

Since 1869, the investment banking firm Goldman Sachs has been working to satisfy their customer’s financial needs. In 2008 the firm played a large role in causing the devastating market crash that negatively affected millions of families around the world. At the heart of the cause of the depression, Goldman Sachs took certain steps to make sure they profited, but unfortunately it was at the expense of the market and the public. Just before the market crash, the company blatantly acted in a manner inconsistent to their code of ethics as well as the standards governing their industry.

In this essay I will be answering the question; Are businesses that act unethically destined for failure? It’s no secret that many, if not the majority, of the world’s most famous companies have been accused of acting in an unethical manner; but the unasked question is why do so many get away with acting unethically. The definition of the ethics is “the study of practices and policies in business, to determine which are ethically defensible and which are not” (Jennifer Jackson 1996 page one)

Describe the social implications of business ethics facing a selected business in its different areas of activity

While reading the case study, “what was up with Wall Street? The Goldman Standard and Shades of Gray” I came across numerous actions that would be considered gray, meaning they may not necessarily be illegal, but when looking at them from a business perspective they could be considered unethical. The first gray area I came across was when Goldman bought 90% of their shares with their own money to make the business appear more successful, leading the public to buy the remaining shares. They then sold the share they had purchased for more money, allowing them to purchase more companies. Second, the company took part in laddering; laddering is defined as “the promotion of inflated pre- IPO prices for the sake of obtaining a greater allotment of the offering (Laddering, 2016)”. In Goldman Sachs particular case the clients agreed top purchases a numerous amount of the

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* Lying- Goldman Sachs lied to some of its best clients and had them pay higher price than the initial price under the laddered IPOs.

Today’s business world presents numerous ethical issues. In today’s world above board/moral ethics in organizations do not often materialize intuitively. Organization must strive to provide employees with a clear understanding of the overall company vision. This will aid employees in practicing the code of ethics, policies and procedures in the workplace. Companies must be unwavering in continuously delivering the uppermost ethics of provision in which customers, applicants and employees are entitled to under fair business practices. One major core value is to uphold responsible and fair business practices.

Ø Give some specific examples of ethical issues that confront businesses and how these might be addressed.

The case revolves around An ex-Goldman Sachs employee, Rohit Bansal, hired in 2014 from the Federal Reserve Bank of New York who obtained confidential information from a friend, Jason Gross, at the Fed. The information concerned a mid-sized New York bank that was a Goldman Sachs client and which Bansal supervised at his former job and the information was then circulated at Goldman Sachs. That leak, which violated a cardinal rule of the regulatory world, provided Goldman a window into the Fed’s private insights about the New York bank and other regulatory matters and a heads up to Goldman Sachs for advising the client.

Business ethics can be understood as codes that define the actions and behavior of the employees in an institution. Standards are set by every company to define what is accepted as ‘Right’ and each employee is expected to abide by these standards. For a business to run successfully it is important to abide by the set of standards that are defined. Companies around the world observe these ethical principles strictly; ensuring that all of their employees follow the rules. When an employee is hired he has moral as well legal obligations. The employee is expected to work as per the requirements in his contract. He should treat others with legitimacy and dignity.

In their personal and professional lives, people can and, unfortunately, sometimes do go against their moral and ethical standards. Ethical standards are what it means to be a good person, the social rules that govern our behavior. Ethics in business is essentially the study of what constitutes the right and wrong or the good or bad behavior in the workplace environment. A business is an organization whose objective is to provide goods or services for profit. The organization has a group of people that work together to achieve a common purpose. The moral challenges that these men and women face each day along with a whole range of problems that could occur, are why ethics plays such an important

Ethics have been a controversial topic for many years. Every business must encounter situations where they are required to find solutions to fix a problem. There must be standards set by a business and these standards are expected to be a symbol of representation from leadership straight to its employees.