Post by kaylaro116 on Dec 4, 2012 23:20:07 GMT -5
Inside Trades SAC Their Reputation
“It takes many good deeds to build a good reputation, and only one bad one to lose it”
-Benjamin Franklin
Inside trading cases are a common issue in today’s society that not only affect the individual but also affect the entire company’s reputation. Recently, Federal prosecutors and the Securities and Exchange Commission accused Mathew Martoma, who worked for SAC's CR Intrinsic unit until 2010, of obtaining tips about a clinical trial for an Alzheimer's drug from a neurology professor, Mr. Cohen, who was working on it. Several SAC investors are interested to see if the case will distract Mr. Cohen and his employees from their job managing their money, or hurt the firm's ability to recruit or retain employees. Not only did Martoma accumulate this information illegally, but he also manipulated the stock market putting others at risk. After learning from the professor in 2008 that the drug trial had gone poorly, Martoma allegedly held a 20-minute telephone conversation with Cohen. Martoma and Cohen then instructed SAC’s senior trader to sell all of the fund’s shares. This demonstrations the negative outcomes that accusations can have on reputation.
This trend is not only common in todays society, but it can also be compared to the way in which the play The Crucible depicts the 17th century Salem Witch Trials. If it were not for accusations and important people conforming to the consensus to protect their own reputation, then the witch trials would not have occurred. The importance of reputation plays a large role in the inside trading case that is in question.
Due to the accusations against employee Mathew Martoma, the entire SAC company’s reputation is in danger. It is definitely a possibility that the historic success of the company could come to an end solely because of this case. In The Crucible it is obvious that the character that most heavily relies on their reputation and therefore has the most to lose is John Proctor. Early on in the play Proctor has a chance to end the accusations and deaths, but he ultimately choses not to in order to preserve his own status. Sometimes it is easier to lie about a bad choice that was made rather than admit it, accept the consequences, and take the risk of ruining one’s reputation.
It is inevitable that Martoma must be aware of the illegal inside information that he gathered, but his lawyer still says that his client will gladly appear in court because he knows that he has not done anything wrong. This is similar to the way John Proctor chose to hold on to his secret of having an affair and keeping his reputation as long as he possibly could. This clearly shows the recognition of the importance of one’s reputation in society and how easily it can be taken away.
This is not the first time that a person has been charged with insider trading. Being that Marthoma is the fifth person associated with the hedge fund that has been accused of this scandal, it is possible that if the SEC now files civil charges against SAC Capital it could further unnerve investors in the hedge fund. It is becoming clear that this case will not only largely impact Marthoma, but there is a large chance that it will also affect multiple companies and the entire hedge fund.
Word Count: 558
“It takes many good deeds to build a good reputation, and only one bad one to lose it”
-Benjamin Franklin
Inside trading cases are a common issue in today’s society that not only affect the individual but also affect the entire company’s reputation. Recently, Federal prosecutors and the Securities and Exchange Commission accused Mathew Martoma, who worked for SAC's CR Intrinsic unit until 2010, of obtaining tips about a clinical trial for an Alzheimer's drug from a neurology professor, Mr. Cohen, who was working on it. Several SAC investors are interested to see if the case will distract Mr. Cohen and his employees from their job managing their money, or hurt the firm's ability to recruit or retain employees. Not only did Martoma accumulate this information illegally, but he also manipulated the stock market putting others at risk. After learning from the professor in 2008 that the drug trial had gone poorly, Martoma allegedly held a 20-minute telephone conversation with Cohen. Martoma and Cohen then instructed SAC’s senior trader to sell all of the fund’s shares. This demonstrations the negative outcomes that accusations can have on reputation.
This trend is not only common in todays society, but it can also be compared to the way in which the play The Crucible depicts the 17th century Salem Witch Trials. If it were not for accusations and important people conforming to the consensus to protect their own reputation, then the witch trials would not have occurred. The importance of reputation plays a large role in the inside trading case that is in question.
Due to the accusations against employee Mathew Martoma, the entire SAC company’s reputation is in danger. It is definitely a possibility that the historic success of the company could come to an end solely because of this case. In The Crucible it is obvious that the character that most heavily relies on their reputation and therefore has the most to lose is John Proctor. Early on in the play Proctor has a chance to end the accusations and deaths, but he ultimately choses not to in order to preserve his own status. Sometimes it is easier to lie about a bad choice that was made rather than admit it, accept the consequences, and take the risk of ruining one’s reputation.
It is inevitable that Martoma must be aware of the illegal inside information that he gathered, but his lawyer still says that his client will gladly appear in court because he knows that he has not done anything wrong. This is similar to the way John Proctor chose to hold on to his secret of having an affair and keeping his reputation as long as he possibly could. This clearly shows the recognition of the importance of one’s reputation in society and how easily it can be taken away.
This is not the first time that a person has been charged with insider trading. Being that Marthoma is the fifth person associated with the hedge fund that has been accused of this scandal, it is possible that if the SEC now files civil charges against SAC Capital it could further unnerve investors in the hedge fund. It is becoming clear that this case will not only largely impact Marthoma, but there is a large chance that it will also affect multiple companies and the entire hedge fund.
Word Count: 558