Law Cases Of Insider Trading In Multinational Corporations Finance Essay - Free Essay Example

Sample details Pages: 8 Words: 2355 Downloads: 6 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? Insider trading is buying or selling corporate stock by a corporate officer or other insider on the basis of information that has not been made public and is supposed to remain confidential Who are insider traders? Corporate officers, directors, and employees who traded the corporations securities after learning of significant, confidential corporate developments. Friends, business associates, family members, and other types of such officers, directors, and employees, who traded the securities after receiving such information. Don’t waste time! Our writers will create an original "Law Cases Of Insider Trading In Multinational Corporations Finance Essay" essay for you Create order Why forbid insider trading? The prevention of insider trading is widely treated as an important function of securities regulation. In order to make sense of insider trading, we must have basic understanding of markets, prices and role of markets in the economy. Insider trading appears unfair, especially to speculators outside a company who face difficult competition in the form of insider trading. Who is Insider is defined under the SEBI Prohibition of Insider Trading regulation (SEC 2 (e)) Insider is the person who is connected with the company, who could have the unpublished price sensitive information or receive the information from somebody in the company. Who can be a connected person? For the purpose this definition, words connected person shall any person who is a connected person six months prior to an act of insider trading It could be director of the company ,or is deemed to be a director of the by virtue of sub-clause(10) of section 307 of the companies act 1956 He /She could be officer or professional of the company or holding a business relationship with the company. Any person having UPPI from the any subsidiary or group company is also stated to be the connected person. Connected person can also be from intermediaries like stock exchange, Merchant Bank, Transfer agent, debenture trustee, Bankers relatives of promoter or of BOD. What is price sensitive information? The Price sensitive information is defined in Regulation 2(h) (a) of the prohibition of Insider Trading. It means any information which relates directly or indirectly with the company which if published is likely to materially affect the prices of the securities of the company. The information which is deemed to be price sensitive is like- Periodical financial results Intended declaration of the dividends(both Interim Final) Issue of securities or buy -back of securities Any major expansion plans or execution of new projects. Amalgamation mergers or takeovers. Any significant changes in policies, plans or operations of the company. CASE 1: INFOSYS Background of the Case Infosys is an information technology Services Company headquartered inÂÂ  Bangalore, India. Infosys is one of the largest IT companies in India with 122,468 employees (including subsidiaries) as of 2010.ÂÂ  It has offices in 33 countries and development centers in India, China, Australia, UK and Canada. This case is regarding a technical violation of Companys insider trading rules by its CEO Kris Gopalakrishnan and an independent director Jeffrey Lehman and the Company imposing a fine on both of them. Course of Action Below listed are some of the extracts from the Infosys Code of Conduct against violation of Insider Trading Rules: In the normal course of business- officers, directors, employees, agents and consultants of the company may come into possession of significant sensitive information. This information is the property of the Company- you have been entrusted with it. You may not tip from it by buying or selling securities yourself. Further you are not to tip others to enable them to profit or from them to profit on your behalf. Insider traders must disgorge any profits made and are often subjected to an injunction against future violations. If there is a change in the shareholding pattern of an employee, he/she has to notify this change to the company within one business day. Finally, insider traders may be subjected to civil liability in private lawsuits. Mr. Gopalakrishnan had actually inherited 12800 equity shares of Infosys from his mother on December 24, 2007. But he inadvertently failed to notify the company about this inheritance of shares within one business day after the change in his shareholding. This, according to the company, constituted a violation of its insider trading rules. On the other hand, Mr. Lehman was found guilty for failure to correctly follow the procedure on sale of shares. Case Status ÂÂ  Infosys audit committee believed that Mr. Gopalakrishnan had no intention of contravening the rules and imposed the penalty of Rs 5 lakh and directed him to donate the amount to a charitable organization of his choice. Mr. Gopalakrishnan has made the donation. Mr. Lehman was also imposed a penalty of $2,000 and that amount, too, has been given to charity. The case is finally closed. References https://articles.economictimes.indiatimes.com/ https://www.infosys.com/investors/corporate-governance/Documents/CodeofConduct.pdf CASE 2: WOCKHARDT CASE Background of the Case Wockhardt is a global, pharmaceutical and biotechnology company. Wockhardt has a growing presence in worlds leading markets like Europe and the United States. It has been a significant player in global biopharmaceuticals market. The case is regarding the former CFO of Workhardt, Mr. Rajiv Gandhi, who had been alleged to have traded in the companys shares on the basis of some insider information which was till then unpublished. It was supposedly reported that he along with his wife and his sister together traded in the companys shares on some insider information. Its the first in Indian corporate history that a company CFO has been charged and indicted of insider trading. Course of Action Rajiv Gandhi (appellant 1) is a Wockhardt Board Member as well as CFO of the company. He is primarily responsible for making financial reports like (balance sheets) for the company. He is a Wockhardt employee since 10 years. As per the SEBI regulations, every company is supposed to prepare its unaudited financial results on a quarterly basis and update it within one month from the end of the quarter to the respective stock exchanges. On 21st January, 1999, at 5 p.m. a meeting of the board of directors of the company was held to consider the quarterly financial results for the quarter ending 31st December, 1998. The financial results were announced on 22nd January, 1999 pre-trading and along with it an interim dividend @ 35% was declared. Wockhardts financial results actually showed a negative performance of the company for the December quarter. This information was somehow leaked and known by Gandhis wife Sandhya (appellant 2) and his sister Amishi (appellant 3). Sandhya and Amishi Gandhi traded on the companys shares multiple times during the entire year on the basis of some or the other Company information which they used to receive via Rajiv Gandhi. Below is the transaction history of Sandhya and Amishi Gandhi. 21/01/1999: Company board meeting was to be held at 5pm; they both together sold 2100 shares of Wockhardt at 2:37 pm and 2:42 pm. 22/01/1999: Company declares financial results and interim dividend pre-trading. Amishi and Sandhya Gandhi sold 1500 shares of Wockhardt at 9:59 am and 10:04 am. 21/04/1999: Amishi Gandhi sold another 2300 shares of Wockhardt at 10:16 am. 22/04/1999: Announcement of Companys financial results as well as a decision of demerger of the business was going to take place at 11:30 am. Amishi Gandhi sold another 1200 shares of the Company at 11:33 am. 23/04/1999: Due to demerger news, the share prices had fallen. Amishi again purchased the companys shares at an average rate at 10:08 am. The above transa ctions clearly proved that the appellants used to trade in the Companys shares as and when they used to get some or the other financial or non-financial information of the Company. As they used to get this information of the company from an insider (Rajiv Gandhi) and they used to trade on that information, they were alleged to be guilty of Insider trading. Case Status SEB I imposed a monetary penalty of Rs. 5 lakh under Section 15T of the Securities and Exchange Board of India Act, 1992 on Gandhi and then case was closed. References www.bloomberg.com www.sebi.gov.in https://economictimes.indiatimes.com/ www.indiakanoon.org CASE 3 :ORACLE CASE Background of the Case This case is all about Christopher M. Balkenhol, the trader misused confidential information gleaned from spouse, who was lead executive assistant to Oracles CEO and Co-presidents.SEC Charges Former Oracle Vice President with Illegal Insider Trading in Stocks of Oracle Acquisition Targets. This case adds to a growing list of recent enforcement actions against corporate employees and securities industry professionals for trading on information about upcoming corporate transactions that they knew to be confidential. Course of Action Christopher Balkenhol, 40, of San Mateo California, learned about secret merger negotiations from his wife, who worked at Oracle as the lead executive assistant to Oracles CEO and two co-Presidents. Balkenhol used information from his wife to buy shares of two companies Retek and Siebel Systems before Oracle made public its plans to buy those companies. Series of insider trading by Balkenhol Relating to Retek- Balkenhol first engaged in insider trading around March of 2005, when he began buying shares of Retek, eventually purchasing $85,000 worth of the Minneapolis-based software firms shares, according to the SEC. The first purchases came just a day after Oracle executives first discussed making an offer for Retek. A week later, Oracle went public with a tender offer for Retek that caused that firms shares to surge. Balkenhol sold the shares on the jump, making an estimated $15,000 in alleged unlawful profits. Relating to Siebel Systems:- The same pattern emerged around Siebel Systems, the commission alleged, with Balkenhol buying more than $270,000 worth of Siebels stock starting just days after Oracles co presidents to whom his wife was also an assistant held a secret meeting with Siebels CEO to discuss a merger. Balkenhol made three more Siebel purchases over the next three months, each one coming shortly after the two companies held additional private talks. He ended up with some 50,000 shares of Siebel, worth around $450,000, stock that he unloaded shortly after Oracle announced on Sept. 12, 2005, that it would buy Siebel for around $5.8 billion. Balkenhol allegedly learned about the planned acquisitions from his wife, who had access to the schedules of Oracles three top executives and was aware of significant merger-related meetings. The Commission does not allege that Balkenhols wife knew about Balkenhols illicit trades. Rather, the complaint alleges that Balkenhol breached a duty not to misuse confidences gleaned from his wife for his own gain. Without admitting or denying the Commissions allegations, Balkenhol agreed to settle the action against him, paying a total of approximately $198,000-including a penalty of nearly $100,000. The total of approximately $198,000 Balkenhol agreed to pay in settlement of the Commissions action includes $97,282 in disgorgement, $4,115 in prejudgment interest and a $97,282 civil penalty. Balkenhol has also agreed to a permanent injunction from further violations of Sections 10(b) and 14(e) of the Securities and Exchange Act of 1934, and Rules 10b-5 and 14e-3 there under. Case Status Case is settled by Balkenhol by paying $198,000 due to insider trading done by him for the violations of Sections 10(b) and 14(e) of the Securities and Exchange Act of 1934, and Rules 10b-5 and 14e-3. References www.bloomberg.com https://economictimes.indiatimes.com/ CASE 4 : RAKESH AGARWAL V/S SEBI Background of the case This case highlights principle of violation of acting on material non-public information which comes under regulations 3 and 4 of the SEBI (Prohibition of insider trading). In this case, Rakesh Agarwal, being insider of organization, is responsible to not act on material non-public information so as to protect the interest of the investors. Course of Action Rakesh Agarwal, the Appelant was the managing director of ABS industries Ltd. (ABS), a company incorporated under the companies act, 1956. ABS was subsequently acquired by Bayer AG (a company registered in Germany).He was involved in negotiations with Bayer A.G (a company registered in Germany), regarding their intentions to takeover ABS. Therefore, he had access to this unpublished price sensitive information. Bayer acquired controlling stake in ABS Industries Ltd by acquiring 55,80,000 shares @ Rs.70/ per share in a preferential allotment made by ABS Industries Ltd. and 20% shares from existing shareholders @ Rs.80/- per share in a public offer made by them It was alleged by SEBI that prior to the announcement of the acquisition, Rakesh Agarwal, through his brother in law, Mr. I.P. Kedia had purchased shares of ABS from the market and tendered the said shares in the open offer made by Bayer thereby making a substantial profit. By dealing in the shares of ABS through his brother-in-law while the information regarding the acquisition of 51% stake by Bayer was not public, the appellant had acted in violation of Regulation 3 and 4 of the Insider Trading Regulations. Rakesh Agarwal contended that he did this in the interests of the company. He desperately wanted this deal to click and pursuant to Bayers condition to acquire at least 51% shares of ABS, he tried his best at his personal level to supply them with the requisite number of shares, thus, resulting in him asking his brother-in-law to buy the aforesaid shares and later sell them to Bayer. Accusations by SEBI The SEBI directed Rakesh Agarwal to deposit Rs. 34,00,000 with Investor Education Protection Funds of Stock Exchange, Mumbai and NSE (in equal proportion i.e. Rs. 17,00,000 in each exchange) to compensate any investor which may make any claim aggrieved with the sale of shares of ABS industries to SHRI I.P.Kedia during the period 9-9-1996 to 1-10-1996 subsequently. along with a direction to (i) initiate prosecution under section 24 of the SEBI Act and (ii) adjudication proceedings under section 15I read with section 15 G of the SEBI Act against the Appellant. Appeal by SAT The Honble Securities Appellate Tribunal vide its order dated 3.11.2003 has allowed the captioned appeal finding that the appellant was not guilty of Insider Trading. However, the tribunal held that since Rakesh Agrawal acted in the interest of the company he cannot be considered to have violated the Insider Trading Regulations. The tribunal also held that although Rakesh Agrawal had made profit out of the transactions but it was only incidental to the cause of the interest of the company. However in appeal to SAT, SEBI later contested the SAT order in SC. Case Status The case was settled through consent order under section 24 of the SEBI Act with Agrawal paying a monetary penalty.

The Unusual Secret of Nonfiction Essay Topics

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Microsoft Marketing Plan Free Essays

string(56) " and diversified products offered by their competitors\." Microsoft Corporation 1. 1 Executive Summary The purpose of this article is to highlight the current marketing strategies of Microsoft Corporation and also to identify the lacking areas where Microsoft should develop new strategies to with stand with the throat cutting market challenges. 1. We will write a custom essay sample on Microsoft Marketing Plan or any similar topic only for you Order Now 2 Mission Statement Empower people through great software anytime, anyplace, and on any device. 1. 3 Our Values As a company, and as individuals, we value integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect. We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves accountable to our customers, shareholders, partners, and employees by honoring our commitments, providing results, and striving for the highest quality. (Microsoft Corporation, 2010) 1. 4 Company Profile At Microsoft, everyone one is motivated and inspired every day, by how their customers use their software to find creative, solutions to business problems, develop breakthrough ideas, and stay connected to what’s most important to them. Microsoft run business, in much the same way, and believe in their five different business divisions, which offers the greatest potential to serve customers. They are: a. Windows ; Windows Live Division: Includes the Windows product family, and is responsible for our relationships with personal computer manufacturers, as well as online software and services through Windows Live. b. Server and Tools: Software server products, services and solutions, include: Windows Server operating system, Microsoft SQL Server, Visual Studio, Silverlight, System Centre products, Forefront security products, Biz Talk Server, and Microsoft Consulting Services. c. Online Services Division: Consists of an online advertising platform with offerings for publishers and advertisers, and online information; offerings such as Bing and the MSN portals and channels. d. Microsoft Business Division: Includes the Microsoft Office suites, desktop programs, servers, and services and solutions; Microsoft Dynamics; and Unified Communications business solutions. . Entertainment and Devices Division: Consists of the Xbox video game system, including consoles and accessories, Xbox Live operations, Zune digital music and entertainment device; Mediaroom, mobile and embedded device platforms, Surface computing platform, and Windows Automotive. We are committed long term to the mission of helping our customers realize th eir full potential. Just as we constantly update and improve our products, we want to continually evolve our company to be in the best position to accelerate new technologies as they emerge and to better serve our customers. (Microsoft Corporation, 2009) 1. 5 SWOT Analysis . 5. 1 STRENGTHS: i. Microsoft is one of the huge reputable global brands currently in the market. It is recognizable for couple of reasons, it was known to be one of the largest software developers and it’s developed a customer base of near about thirty million people all around the world. ii. It has built its brand image on the successful development of its computer software namely the Windows series of products. iii. Brand is everything, Microsoft is one of the best established, highly visible and healthy IT brands in the World, and holds a very loyal set of passionate customers that advocates and uses the brand. By loyal customers, it means that Microsoft retains old customers as well as recruits new ones too. iv. The corporation is alienated in several central offices inside the United States and all around the globe making the distribution channel and development of its products easily approachable to every consumer. It helps the company to launch new products and services across the globe at the same time. 1. 5. 2 WEAKNESSES: i. Microsoft lacks a solid client age and service support centre on the internet. This issue has to be rectified in order to overcome since problems and bugs with regards to their products must be fixed rapidly to attain efficiency. The lack of a customer service centre would erode the integrity and quality perceived by costumers on Microsoft products. ii. Generally Microsoft products have compatibility issues with different hardwares and softwares platforms manufactured by other companies, hence this sort of compatibility issue would then limit the ability of the customer to buy all products made by Microsoft since it would affect the stability and performance of a computer. ii. Microsoft does not share the programming codes of its softwares making modification difficult if bugs and other malfunctions are detected by programmers not affiliated to the company. 1. 5. 3 OPPORTUNITIES: i. Microsoft has expanded its market share by entering into the Chinese market by producing computer programs based on the Chinese language and giving discretionary authority to the Ch inese government to censure and to eaves drop on emails, documents and webpage. ii. Microsoft has also diversified its products. During the past years the company has ventured into fields such as game design, game developing and publishing and the production of game consoles such as the Xbox. iii. The company has also branched out to provide free email and news services to its customers. It has also developed softwares and computer programs that are vital in organizing business spreadsheets and data. 1. 5. 4 THREATS: i. Microsoft has created a set of example for all existing and forthcoming software developing houses to follow the same footsteps for such a drastic success. ii. Early competitor of Microsoft in the operating systems industry is the Linux program which was developed by independent programmers. this program gave very though time to Microsoft due to of its user friendly and can be obtain free of charge. iii. Because the company is diversifying in various fields it started to compete with the products being produced by such companies who have been experts in their parent industry. The company might eventually lost its battles in making its products competitive when put side by side with products made by corporations which has established heir name and reputation to the customers. iv. Microsoft is losing its market share steadily, due to increase in competition and diversified products offered by their competitors. You read "Microsoft Marketing Plan" in category "Papers" A recent publication (Thinking Made Easy: SWOT Analysis of Microsoft) 1. 6 PESTEL ANALYSIS APESTEL analysisis a set of tools or an investigation of the important factors that are chronologically changing which influences on a businessexternally. PESTEL is abbreviated as Political, Economical, Social, Technological, Environmental ; Legal impacts. Politically influences on organisation like abrupt changes in government, inconsistency in their policies. Economic changes relate to changes in the macro economical conditions such as unstable economical conditions, rise in people standards or fluctuations in interest rates, etc. Social changes relate to changes in society (either globally or locally) such as changes in lifestyles e. g. more women going out to work, changes in customers buying behaviours. Technological changes relate to the entrance of new high tech inventions and ideas such as the development of the robotics and internet as business tools. Environmental changes means the impact on production oriented organisation with the environmental policies like all textile manufacturing units were transferred to Asian markets from Manchester UK due to its adverse effect on the environment. PESTEL Analysis a. Political Microsoft is highly affected by the political scenario there in USA. Microsoft is becoming one of the giant companies globally. It has created huge monopoly across the globe. US government is now trying to break up Microsoft into several different companies so that to maintain equal competition throughout the market. One of the other reasons in splitting up Microsoft Corporation that it is becoming so much stronger that it could be a threat for even US government in near future. b. Economical Being such a versatile company and the market share they have, Microsoft plays major role in bringing up the country economies they have set-upped their businesses. According to an independent studies that the economies of the country shoots up three times when Microsoft starts businesses in that country. c. Social Microsoft has an edge on all of its competitors that socially more people are inclined towards Pentium platforms so naturally it helped a lot to have more market share rather than others. Market segment of Pentium users is considerably very huge but it would be threat for Microsoft that they are losing its share with an average pace, due to their unsatisfied customers. d. Technological It was a decade earlier that Microsoft was the leader in producing high tech softwares and gadgets, but now they are getting tough competition from global phenomenon brand ‘Apple’. No doubt Microsoft adopts and market new technology as soon as it could be but still i e. Environmental Microsoft follows very strict policies to make sure that the company remains in full compliance with international environmental regulations and the specifically environmental requirements of each country/region where they are doing their business. Microsoft reduces waste disposal, where possible through source reduction and recycling at company facilities. All waste safely and responsibly handled and disposed of properly. f. Legal Microsoft is playing vital role in legal aspect of their pirated products like Windows and other softwares. They are trying their level best to reduce the usage of their pirated softwares. They are introducing different security features which may reduce the usage of pirated products. 1. 7 Porter’s Generic Strategies Michael Porter has proposed three generic strategies that provide a good starting point for strategic thinking; overall cost leadership, differentiation, focus and combination of all these three strategies is known as stuck in the middle. Microsoft is a versatile company it produces series of products and services which caters different market segments, and according to every particular segments they developed their specific strategy for different product segments. a. Overall cost leadership Microsoft’s has out scoured its major software houses towards Asian markets, that help them to develop efficient and yet low cost softwares with low overhead or manufacturing cost. The added benefit of companies going globally is that they get access to their local market, and one of the reasons Microsoft has established software house in India is to expand their Indian market share. b. Differentiation The other strategy which Microsoft is keep following since very early stages, is of their differentiated products and softwares. With the launch of Windows the most user friendly and c. Focus Microsoft has narrow down its market segments, they identified the need of their customers and created segments within the segments. For example at first there was only one segment of computer games lovers but now Microsoft has narrow down this segment and created a separate gaming console for gamers called Microsoft Xbox 360. 1. 8 Implementation Plans As a marketing adviser, I would redefine the marketing structure by improving their segmentation, targeting and positioning strategies. Last year Microsoft launched Xbox 360 gaming console, it was segmented for kids to teens gaming needs and it was positioned as a complete home entertainment solutions which merges video gaming, internet and DVD playback. The Xbox 360 is the most robust and high tech gaming console in current market. Sony Playstation 2 is currently the market leader with almost more than 50% of the gaming console market share. The Xbox was launched the previous year and positioned as the complete home entertainment solution combine video gaming, the Internet and DVD playback. The Xbox is the most robust gaming console on the market, but faces stiff competition in its product category. Microsoft is trying its level best to become the market leader in this category by dethroning Sony. To accomplish this goal, Microsoft has to restructure its targeting strategy; specifically they should stick to a specific age group people so that they could focus their efforts on them. They should more focus on people aged between 16 to 24, due to the high tech device and this age group are very high gamers. This age group people are substantial knowledge how to use high tech equipment and themselves fascinated by the entire features Microsoft is offering. Secondly, these age group people are good source of marketers by influencing their friends and family circles by introducing them and flavouring them its joy. Considering various opportunities and challenges ahead, Microsoft must continue to narrow down their campaign specifically on the heavy male gamers, since this demographic category are usually trendsetters in the society and they are even very early innovators too. Microsoft should work out on the differentiation strategy, in the current market scenario Microsoft is the only one who is offering online and network gaming on their gaming consoles where as Sony and Nintendo are not offering such features, so Microsoft should invest more capital for marketing in such area which make them set ahead among their competitors. In the software development side, Microsoft is facing huge customers losses by one of its competitors namely OpenOffice, they are offering complete range of office softwares free of cost, thus giving very tough time to Microsoft Office software, in such critical situation my opinion would be going towards differentiated strategy. Technically Microsoft should develop such uniqueness in their Office software so that customers (majority of them are students) can’t think to adopt free softwares rather than paid one, customers should have high perception in their mind that paid must have great value rather than free one. This can be achieved if Microsoft creates a monopoly by creating incompatible extensions of Office which can only be viewed and edited on exclusively Microsoft Office. Bibliography Hollensen, S. (2004). Marketing Management. Illinois: Pearson Education Limited. Kotler, P. (2002). Marketing Management (Eleventh ed. ). California: Prentice. Microsoft Corporation. (2010). About Microsoft: Your Potential. Our Passion. Retrieved March 12, 2010, from Microsoft Website: http://www. microsoft. com/About/default. mspx Microsoft Corporation. (2009, December 4). Our Commitment to Our Customers. Retrieved March 12, 2010, from Microsoft Corporation Website: http://www. microsoft. com/about/companyinformation/ourbusinesses/business. mspx How to cite Microsoft Marketing Plan, Papers