Case Synthesis: Morgan Stanley
Case Synthesis: Morgan Stanley
1. Basic Empirical Facts of the Problem
Insider trading is the possession of confiedential information for the purpose of gaining advantage in trading (Heakal). In 2014, Frank Tamayo, who received confidential information from a law institution employee Steven Metro, provided tips to a broker of Morgan, Vladimir Eydelman, who was charged for insider trading. Metro was employee of Simpson Thacher & Bartlett, a law firm which provide mainly mergers and acquisitions services, and he was accessible to confidential information of clients. Metro provide the information to Tamayo in their off-duty meet by using written napkins and destroyed it subsequently. Eydelman tried to cover up the crime with the appearance of legal trading which based on legitimate research by sending artificial emails to Tamayo. Their plan to avoid detection allow Eydelman, Tamayo …show more content…
2. Causes
2.1 Breach of fiduciary duties
As an employee of the law firm Simpson Thacher & Bartlett, Metro owes his fiduciary duties of confidentially to the information he is able to access. Yet, Metro failed to hold his duties by committing insider trading upon using and disclosing confidential client information to the third party. Despite the fact that Eydelman should have restrain from trading with material information obtained illegally from Metro, he continually engaged in insider trading.
2.2 Inadequate internal security system
Although Metro had participated in transaction for at least 2 times, it was not detected by the law firm. It demonstrates that the firm had no internal control system to detect insider trading. It is suggested that there should be internal policies to supervise and track log files of employees to prevent similar crime given that employees of firm is essential to access through confidential information for working purpose.
3.
1. Basic Empirical Facts of the Problem
Insider trading is the possession of confiedential information for the purpose of gaining advantage in trading (Heakal). In 2014, Frank Tamayo, who received confidential information from a law institution employee Steven Metro, provided tips to a broker of Morgan, Vladimir Eydelman, who was charged for insider trading. Metro was employee of Simpson Thacher & Bartlett, a law firm which provide mainly mergers and acquisitions services, and he was accessible to confidential information of clients. Metro provide the information to Tamayo in their off-duty meet by using written napkins and destroyed it subsequently. Eydelman tried to cover up the crime with the appearance of legal trading which based on legitimate research by sending artificial emails to Tamayo. Their plan to avoid detection allow Eydelman, Tamayo …show more content…
2. Causes
2.1 Breach of fiduciary duties
As an employee of the law firm Simpson Thacher & Bartlett, Metro owes his fiduciary duties of confidentially to the information he is able to access. Yet, Metro failed to hold his duties by committing insider trading upon using and disclosing confidential client information to the third party. Despite the fact that Eydelman should have restrain from trading with material information obtained illegally from Metro, he continually engaged in insider trading.
2.2 Inadequate internal security system
Although Metro had participated in transaction for at least 2 times, it was not detected by the law firm. It demonstrates that the firm had no internal control system to detect insider trading. It is suggested that there should be internal policies to supervise and track log files of employees to prevent similar crime given that employees of firm is essential to access through confidential information for working purpose.
3.