Mailbox: 1540 ID #: S0119668

Conflict on a Trading Floor Summary & Analysis

I. Case Summary
The case opens with an introduction to two employees at FirstAmerica Banks main
trading floor. The first employee is Linda a top salesperson and the second is an unnamed
assistant who works with three vice presidents as well as Linda. Linda and the assistant then
began working on a $700 million dollar deal with one of her clients, Poseidon Cruise Lines. The
deal ended up becoming highly complex and involved complicated currency exchange and long-
term yearly payments.
Due to the previously established relationship between Linda and the treasurer and CFO
of Poseidon, she encouraged them to trust her and not shop the deal because it would increase
Poseidons costs of doing this deal. It is at this time that the assistant begins questioning Lindas
method of conducting business and ethics as she over exaggerated the importance of secrecy in
this deal to the client. Additionally, Linda quoted interests rates that were suspiciously high that
would result in an extremely profitable transaction for the bank. Linda had mislead Poseidon
into believing the bank would only profit $1.2 million while the assistant calculated a fee of
roughly $12.5 million.
Poseidon began to have some doubts on the structure and the fairness of pricings that
Linda had quoted based on what they knew about current rates. To settle the clients concerns,
Linda demanded the assistant fax over a misleading document. When the assistant requested
some explanation of the deal and the fax Linda quickly refuses to speak with him. Clearly, the
assistant is suspicious that she is trying to hide information from him as well as the client. The
case ends with the assistant contemplating the repercussions of his sending or not sending the fax
that he knows will unethically mislead the client.
II. Opinions
In my opinion, Linda has behaved very unethically from the beginning of the deal when
she requested the client to not consider any competing offers. By requesting this she insulated
herself from any price competition and from the client receiving any contradictory information to
what she provided. Then by sending this fax, she would be blatantly misleading the client with
false information, which I believe is the most unethical behavior Linda exhibited. The assistant
is in a very difficult position and needs to make the choice between his career and his faith. If he
sends the fax he will be violating his personal code of ethics but furthering his career and if he
does not send the fax he will most likely lose his job with no recommendation letter but maintain
his personal ethics.
III. Recommendations
Based on the current situation explained in the case, the board of directors is unaware of
the unethical behavior of their employee Linda. The board could gain the necessary information
if the assistant serves as a whistle blower to one of his superiors about Lindas unethical
behavior. Once the board gets the information, their immediate action should be to fire Linda as
an example that the firm will not tolerate unethical employees. Then they should work on
preserving the relationship with Poseidon with the goal of completing a deal with them.
In the case, it appears that the fellow workers at FirstAmerica are uninterested and
unaware of how to behave ethically as they do not seem to view Lindas actions as a problem.
Therefore, the board needs to implement an ethics-training course to educate their employees on
how to ethically behave with clients. Additionally, they need to create a culture of openness and
communication so that any employees, no matter their position, can have the ability to voice
concerns about the ethics of a fellow employee or a current deal.