Case Study: Nick Leeson and the Collapse of Barings Bank

In 1985, Nick Leeson had a job as a clerical work at Coutts & Co. The Coutts & Co is a private banking house in United Kingdom which own by aristocrat. This bank was a subsidiary of the National Westminster Bank. During that period, the stock markets were rising for several years and the bank were expanding into a new financial instruments coming in and demand for labor was high. During that time, Nick Leeson was the person who had many working class young men.

After two years, Nick Leeson moved to Morgan Stanley, one of the US investment bank. Nick Leeson be a settlements clerk at that bank.… Read the rest

Case Study on Business Ethics: Madoff Investment Scandal

Bernard “Bernie” Lawrence Madoff is an American investment adviser and stock broker who operated Madoff Investments in an unethically acceptable manner. He used the company as a front to commit a Ponzi scheme which fleeced investors of over $65 billion. This has been regarded as the largest Ponzi scheme ever. Madoff grew up in a humble background and he established the Madoff Investments Company with support from the father in law. A few friends and family members also supported Madoff with the operations and growth of the business. Madoff used the returns from investment to support several charitable and political causes which his firm believed in.… Read the rest

Ethics in Financial Reporting

Integrity is of utmost importance for a successful career in business and finance in the long run. Some believe that the world of finance lacks ethical considerations. Whereas the truth is that such issues are prevalent in all areas of business.

The business environment in much of the world is reeling from the revelation of several financial scandals in the past few years. The optimism of the turn of the century has been replaced by scepticism and distrust. It will be discussed as to how we landed ourselves in this situation, what is being done to correct it, and what the future holds for us.… Read the rest

Case Study: Bre-X Scandal – The $6 Billion Gold Fraud

The Bre-X scandal is the perfect example of a true fraud that results from dishonest and deceitful business ethics, morals, and principles. The Bre-X scandal is considered to be the biggest mining and gold scandal of all time, and one of the biggest stock scandals in Canadian history. The Bre-X scandal significantly damaged the Canadian Financial Markets and caused substantial reductions in consumer buying and trading confidence, which caused a considerable amount of damage to the Canadian economy. Subsequent to the collapse of Bre-X in 1997, its stocks and shares became worthless and left investors with significant losses.

The Bre-X scandal began in March 1993, subsequent to the company purchasing a large mining site in Busang, Indonesia (on Borneo).… Read the rest

Case Study: The Collapse of Lehman Brothers

Lehman Brothers Inc operated at a wholesale level, dealing with governments, companies and other financial institutions. Its core business included buying and selling shares and fixed income assets, trading and research, investment banking, investment management and private equity.

In September 2008, Lehman Brothers filed for chapter 11 bankruptcy protection. The company became insolvent with finances totalling $639 billion in assets and debt worth $619 billion; it became the largest bankruptcy in history. The company employed 25,000 employees worldwide including 5,000 and was the fourth largest US financial bank at the time of the bankruptcy. It also became the biggest victim of the subprime mortgage disaster that had put the global financial sector into meltdown.… Read the rest

Case Study: WorldCom Accounting Scandal

Founded initially as a small company named Long Distance Discount Services in 1983, it merged with Advantage Companies Inc to eventually become WorldCom Inc, naming its CEO as Bernard Ebbers.WorldCom achieved its position as a significant player in the telecommunications industry through the successful completion of 65 acquisitions spending almost $60 billion between 1991 and 1997, whilst also accumulating $41 billion in debt. During the Internet boom WorldCom’s stock rose from pennies per share to over $60 a share  as ‘Wall Street investment banks, analysts and brokers began to discover WorldCom’s value and made “strong buy recommendations” to investors.’  During the 1990’s WorldCom evolved into the ‘second-largest long distance phone company in the US’  mainly due to its aggressive acquisition strategy.… Read the rest