Business Investment Concept

Discuss about the Business Investment Concept.

According to the excerpt, it indicates clearly that Mr. George was extremely unprofessional in his work and his gross misconduct was quite evident in everything he did to Ms. Laura and her daughter. He violated the code of integrity and ethics outlined in the professional Standards document. In any investment undertaking, it is necessary that the parties concerned agree on some vital things especially when an individual does it on behalf of another person (McGrath, 2012).

Ms. Laura’s daughter does not believe the investment in Sahara Real Estate Company’s stock, or the excessive trades Mr. George made, were “suitable” for an elderly client (i.e., her mother) requesting the use of both a “buy and hold” and conservative investment strategy. Do you agree or disagree? Explain your answer. 

Mr. George’s responsibilities were when he opened the account for Ms. Laura was limited to working as partners but not transacting any business without her consent. Some of the things he was not allowed to do were collecting stocks, securing bonds and other assets. The account application had further warnings that Mr. George was expected to adhere to; according to Ms. Laura, high-risk investments were not fit for her due to her old age. Mr. George equally violated this and he indulges into high-risk investments. This shows how he was unprofessional and lacks integrity. Furthermore, Mr. George bought and held securities for a long time contrary to their agreement. In this case, Ms. Laura wanted to lower a number of sales she will have to pay from her account.

Most of the securities Mr. George bought and sold for Ms. Laura and her daughter’s accounts were identical in spite of the differences in their investment strategies. Discuss whether this was appropriate given his obligations under the “suitability requirement

Mr. George was expected to uphold the highest standards of professionalism and to do exactly what they agreed upon. However, he did not carry out proper research on the Sahara Real Estate Company before he embarked on investing in it. This, he admitted when questioned about the suitability of the company. Ms. Laura’s daughter disagreed with the fact that Mr. George bought and held securities in her account. This strategy, she believed that preferred her mother’s account and not her own account.

Discuss the requirements in Professional Standard 1? Indicate whether Mr. George was required to comply with these requirements, and if so, what he was required to do.

According to Mr. George’s agreement with Ms. Laura, her account was supposed to be traded with securities of the type ‘buy and hold’ because she wanted that the securities are held for a long time before commissions are made. It is true that Mr. George did not the two accounts differently as per the initial agreement they made. In fact, the two accounts traded in a similar way despite the fact that Ms. Laura’s account was to handle a different security investment. This act by Mr. George was inappropriate and contrary to the responsibilities, he was conferred.

Discuss the requirements in Professional Standards 5 and 6. Discuss whether Mr. George complied with these requirements in connection with the purchase of Sahara Real Estate Company’s stock for Ms. Laura’s account.

It was appropriate for Mr. George to comply with the requirements of professional standard 1 since this was an agreement they made. He was expected to show the highest integrity and ethics. The high integrity would have been proved if he followed and considered their agreement with Ms. Laura and her daughter requested him to do. Mr. George was not required to run the two accounts as his own; he was not allowed to make investments or buy bonds without consultation from Ms. Laura. He violated all these and went ahead to do the contrary. This indicates how he was (Mr. George) a traitor.

Discuss Professional Standard 2A in connection with the securities regulatory agency’s investigation of Mr. George and his firm’s brokers and managers, in connection with their purchase and sale of Friendly Software Company’s stock. Also discuss whether Professional Standard 6 would apply to this transaction.

Another violation arises when Mr. George purchased Sahara Real Estate stock. This was quite a unprofessionalism because he was obliged to carry out a thorough investigation about the company. To make matters worse, the Sahara Real Estate company was owned by Mr. George’s sister, something that shows that some dubious agreements were going on. It was important for Mr. George to notify his partners with concrete information about the dealings of Sahara Real Estate company. It reveals that something is hidden and their cooperation could be unhealthy for the survival of their businesses.

Mr. George guaranteed Ms. Laura and her daughter a 10% annual return on their investments if they opened a brokerage account with his firm and allowed him manage their investments. Discuss whether this statement was appropriate under the CFA Professional Standards of Conduct.

It is equally improper for Mr. George to have bought Friendly Software Company’s stock because he used the two accounts of Ms. Laura and her daughter to engage in such move. He certainly decided to manage the two accounts contrary to the agreement they made before the start of the business. Mr. George told Ms. Laura and her daughter that they would earn 10% yearly return if they accepted to open a brokerage account with his company and that they allow him to run their accounts. This was unethical because it is not allowed to run another person’s account without his/her consent. In this case, it can be very hard to trust a stranger with account details and to make things worse, he could buy shares, bonds, etc from the two accounts (Keenan, D. & Riches, 2010).

According to the proponents of the virtue ethics theory, there are certain character traits (i.e., virtues) that it is good for each person to possess. They believe that being good is more about “who we are” rather than “what we do.”

The conduct of Mr. George was generally unprofessional and it can be concluded that he lacked virtues. He generally behaved like a conman, and it could not be trusted anymore. It is important to handle people with a lot of wisdom and justice when it comes to doing business with others. Any slight misconduct may tarnish your image and bar people from trusting you anymore.

References

Keenan, D. & Riches, S. (2010). Business Concepts (1st ed.). Harlow: Pearson Longman.

McGrath, R. (2012). Business Ethics. Retrieved 21 January 2017, from http://www.strategy-business.com/article/09214?gko=d386f

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