Ethical Leadership: Information Advantages for Major Clients: Goldman Sachs
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Ethical Leadership: Information Advantages for Major Clients
Goldman Sachs is one of the performing banking institutions in Wall Street. As an investment bank, the bank covers larger business entities together with the normal customer base. Due to the nature of the clients handled by the bank, changes in price focus and market conditions can affect their performance and the performance of such companies under the institution. For this reason, therefore, the bank developed a new policy that would see their research analysts meet weekly with their stock traders (Hosmer, 2011) to discuss trading huddles. The meetings would be conducted to explore possible changes in earnings and market conditions that are likely to affect the stocks of particular companies. These analysts were tasked with covering different companies on a continual basis (Hosmer, 2011) and would monitor the trend of their stocks to provide recommendations to the bank on the way forward. The recommendations of the analysts were crucial for those who are interested in the stock performance and were availed to all the bank clients who needed them.
The meetings of the investigators focused on short-term effects of the movement of share prices of individual companies and the anticipated market changes than the strengths and weaknesses of the business strategies (Hosmer, 2011). The information provided by the analysts were then passed to their trade partners who then took their advice on whether to hold, sell or buy stock and then execute orders appropriately. The equities traded were at times conducted using the internal accounts of the bank, and thus the funds would still revolve. Such nature of short term trading is of higher risks but at the same time offer higher profits both to the trading companies and to their clients (Hosmer, 2011). Even as the bank share the information with its customers on the trends in the markets as per their requests, critiques argue that, the bank only passes the trading ideas to its traders and key customers. On such limitation, the critiques accuse the bank of not offering the opportunity of trading on the information of other customers, which in turn hurts the customers (Hosmer, 2011).
The short-term market movements are critical to key companies in monitoring their trading and performances in the market. The short-term forecasts have a possibility of affecting larger firms and by providing information from the trading hurdles could enable them take strategic steps in response to market shifts that in turn would protect their position or profit them. Such information from analysts' expectations for short-term price movements and the market changes should not necessarily be disclosed to all of the bank clients who requested them since they have no impact on them (Hosmer, 2011).
Therefore, the firm’s largest customers and key customers should be key beneficiaries of such analytics to maintain their market stabilization and performance trend. Offering such information to other clients who would not feel the impact of the changes would only cause unnecessary anticipations. On the other hand, any analytical information that could result in long-term changes in ratings should be provided to every client (Hosmer, 2011). There are legal mandates that dictate the disclosure of such information, and at all circumstances, they should be adhered to. It is critical that the bank avoid any injurious actions that can affect its performance too and any conflict relating to social and economic performance conflicts be avoided (Hosmer, 2011).