Case Analysis on Ethical Leadership
User Rating: 0 / 5
- Details
- Hits: 10200
Bernard Madoff established an asset management firm that was ideal to manage other people's fund and invest them to achieve returns in interests. He decided that path with a view that he would expand and build an emperor from the wealth created from the contributions. In that scheme, successes were derived from the revolving funds and the chain of new contributors without actual investment. On this effect, the schemes tend not to last longer in the event there is no continued flow of money to keep the cycle (Hosmer, 2011). Madoff had exceedingly been successful in the electronic exchange trading he had started at the stock markets and his firm continued to excel, precisely achieving both wealth and stature. He is reported to be the first to invest in electronic technology to buy and sell astock at reduced trading costs.
The investments Madoff made were strategic and of their kind, with the Cincinnati becoming the first all computerized stock exchange. His investment securities at one time handled more than 5% of the general trading volume of the New York Stock Exchange. Bernard was successful together with his firm, and he rose to the helm of different institutions serving in the capacity of chairperson for different periods (Hosmer, 2011). The large number of people who contributed to his firm could not be contained with the investment he made. Since the number of people who contributed to the investment company was expanding beyond expectations, the best thing the proprietor could do is to invest more of the funds to achieve the real returns, a thing he never did. Even though the operation of the firm continued without the interruption and the investors continued to make better profits, the reality was that there were no actual returns and the trade depended on influx of investors to keep the cycle going.
The human moral standards are subjective, and it differs from person to person. The fact that there are standards set for moral uprightness by a community does not mean that everyone is going to interpret it in a similar or rightful manner. There are people who would strive to benefit out of situations without keeping in mind the end effect or the feelings of others. In another twist, a person may decide to keep some information in an event of protecting the cause of harm to another. People defend morals from different perspectives and Bernard decided to keep all his operations secretive in order to expand his firm and keep it rolling (Hosmer, 2011). He did all the internal operations himself, and by the fact that he never invested any money, no one understood. This gives a picture of investment firms where people could be reaping from the contribution of others without real returns. Another possibility is that the investment firms who take on the actual investment could be reaping more than the shareholders or the contributors since no one understands what happens behind the scenes.
As an advisor to a charitable organization that was investing substantial funds through Madoff, I would seek to discuss partnership in the event of investing and know the end of the funds being invested other than being a passive investor. That would at least make it easier to establish a sham and avoid any resulting loss. As a member of well-paid feeder fund collecting smaller amounts from middle-income investors for transfer to Madoff, I would also first seek clarification and information on the operations and the actual investments undertaken for the sake of the investors. I would also ensure that there is proof of compliance and a guarantee of the safety of funds. Being a competitor who reported to the SEC about the investment model of Madoff and inability to generate such significant and consistent returns but seen little happen, I would seek to inform the public on the best practices and the possible useful models of investment. Giving people relevant information about investment models and the necessary procedures and compliance would prevent any further loss and protect the image of the industry.