This document discusses eBay's efforts in mobile commerce (m-commerce). It notes that the rise of mobile devices has allowed consumers to make purchases from anywhere, leveling the playing field for comparison shopping. The document outlines eBay's success in m-commerce, including generating $1.5 billion in mobile sales in 2010. It details eBay's mobile apps and strategies to influence consumer purchasing decisions beyond just allowing searches and purchases. This includes inspiring browsing through features on the eBay Fashion app to digitally "try on" outfits. While eBay has found success, it must continue innovating to stay ahead in the fast-changing mobile space.

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Case study
eBaY
Chapter 6
Creating Customers on the move
The advent of mobile commerce (m-commerce) has be-
gun to create significant changes in the way consumers
make purchasing decisions. The introduction of online
shopping first began to draw customers away from brick-
and-mortar retailers, changing the location of where they
made their purchases. The use of mobile devices has ex-
panded the location of purchase decisions even further,
so now consumers can make purchases from almost any-
where, so long as they have a mobile device with them. It
also has leveled the playing field for consumers in many

3. cases, as it allows them to comparison shop on prices of
products that they might find in stores.
In 2009, the mobile commerce market generated
$18.3 billion in total revenue. By 2015 it’s projected to
reach over $119 billion. When it comes to m-commerce,
eBay has jumped in with both feet. It is estimated to hold
about 3.3 percent of m-commerce, compared to online
retailer Amazon’s 1.5 percent. It also was estimated to sell
$1.5 billion in goods via m-commerce in 2010, compared
to $600 million in 2009. eBay launched its first mobile ap-
plication for the iPhone in July 2008 and has since pro-
duced 14 apps, including eBay Selling, StubHub, Deals,
and Fashion. eBay’s core iPhone application has been
downloaded 14 million times, and its entire stable of apps
has seen over 30 million downloads worldwide. Purchases
range from clothing and accessories to sporting event and
concert tickets, computers and technology gadgets, col-
lectables, and even luxury automobiles. Research indicates
that more than half of regular m-commerce purchasers are
comfortable spending over $100 on a mobile purchase,
and 14 percent are willing to spend over $1,000.
eBay has been quick to embrace the trend toward
comparison shopping, as potential buyers compare in-
store prices online with those offered by other retailers. In
June 2010, eBay purchased RedLaser, a mobile app that
uses the cell phone camera to identify a product’s bar code
and locate that product within eBay’s system.
If a buyer is searching for a certain designer jacket, for
example, he could compare prices between eBay’s auc-
tions, flat-priced buy-it-now options, and eBay’s Fashion
Vault, which offers limited-time deep discounts on select
high-end merchandise.

4. But while eBay has excelled in m-commerce so far, its
ability to fully capitalize on this growth potential depends
on how it is able to influence consumer purchasing deci-
sions. Merely allowing consumers to search for items, com-
pare prices, and then make a purchase isn’t enough. As
eBay Vice President of mobile platforms Steve Yankovich
says, “We want consumers to engage when they don’t
have a purchase in mind.”
The combination of apps with mobile devices en-
ables browsing and purchasing virtually anywhere at any
time, especially during downtime—say when the poten-
tial buyer is getting a haircut or waiting in line at the cof-
fee shop. By enabling buyers more opportunities to shop
and make purchases, eBay is hoping to spark purchases
based on the buyer’s immediate situation. The eBay
Fashion app is designed to inspire browsing and experi -
mentation, offering features such as a clothing-focused
search function, a virtual closet to save various finds, and
a mix-and-match feature that allows users to pair up ar-
ticles of clothing with various accessories. Users can even
take a picture of themselves using the phone camera and
the Fashion app will superimpose the outfits they cre-
ate over their figure, allowing shoppers to digitally “try
on” the looks. So if a purchaser saw a dress she liked at
a party, she could “try it on” and match it up with acces-
sories in her wardrobe. eBay is planning to release even
more apps like eBay Fashion, targeting key eBay shop-
ping demographics such as car enthusiasts and home-
and-garden enthusiasts.
Early trends suggest that shoppers are responding to
eBay’s efforts as well. As eBay has continued to develop the
offerings of the eBay Fashion app, average user browsing

5. CASE STUDIES 1
time on the app has increased by 40 percent since its
original release and mobile fashion sales tripled over the
past year. If nothing else, the new trends in m-commerce
move very quickly, and eBay must continue to innovate if it
wants to stay ahead of the game. Says Yankovich, “Nobody
knows what’s going to happen in mobile. We need to be
ready to spin on a dime.”
Sources: Miguel Bustillo and Ann Zimmerman, “Phone-
Wielding Shoppers Strike Fear into Retailers,” Wall
Street Journal, December 15, 2010,
http://online.wsj.com/article/SB10001424052748704694004576
0196917
69574496.html (Accessed November 8, 2012); Geoffrey Fowler
and Ray Smith, “eBay Adds ‘Flash’ Fashion,” Wall
Street Journal, March 29, 2010,
http://online.wsj.com/article/SB10001424052702304434404575
1496717555
88744.html (Accessed November 8, 2012); Dan Macsai, “eBay
Dials M for Makeover,” Fast Company, December
2010/January 2011, 42–44; “From the Winter Olympics to
Designer Handbags and Sports Cars, M-Commerce
Leader eBay Shares Global Mobile Shopping Moments for
2010,” BusinessWire.com, December 29, 2010,
www.businesswire.com/news/home/20101229005467/en/Winter-
olympics-Designer-Handbags-Sports
-cars-M-commerce (Accessed November 8, 2012); “eBay
Mobile Commerce Trends,” Online Marketing
Trends, February 5, 2011, www.onlinemarketing-
trends.com/2011/02/ebay-mobile-commerce-trends

6. .html (Accessed November 8, 2012); Douglas MacMillan and
Joseph Galante, “As Mobile Shopping Takes
Off, eBay Is an Early Winner,” Bloomberg Businessweek, June
23, 2010, www.businessweek.com/magazine
/content/10_27/b4185027420770.htm (Accessed November 8,
2012).
Q u e s t i o n s
1. Which stages of the consumer decision-making
process are affected most by comparison shopping on
mobile platforms? Explain.
2. Based on the goal expressed by Steve Yancovich,
which stage of the consumer decision-making process is
eBay trying to influence? How are they doing so?
Case 7
Rajat Gupta and Insider Trading
AUTHOR BIOGRAPHY
Kelly Mullen is an assistant professor of finance at Trinity
Christian College in Palos Heights, Illinois. Her research
interests include real estate tax-credit and municipal finance,
leadership, and business ethics, with a special interest in
managerial ethics in the financial services industry.
CASE OVERVIEW
One of the most high-profile insider trading events in recent
history went to trial in 2012 and involved Rajat Gupta. Gupta
was the former managing director of McKinsey Consulting, a
highly prestigious global consulting firm that provides expertise

7. and advisory services for many of the world’s highest profile
companies, governments, and nonprofit organizations. The case
against Gupta grew out of the investigation of his friend and
business associate Raj Rajaratnam, who in 2011 was convicted
on multiple counts of conspiracy and securities fraud.
Surveillance of Rajaratnam indicated that Gupta was an
informant who had been sharing insider trading tips about
Goldman Sachs and other firms. Because of Gupta’s high status,
his reputation, and the trust he engendered in the marketplace,
he was considered an extraordinarily high-profile subject.
WHO IS RAJAT GUPTA?
Rajat Gupta had the rare honor of being the first foreign-born
managing director McKinsey Consulting (1994–2003) had ever
had. He also served on several highly prestigious corporate
boards, including Goldman Sachs and Procter & Gamble. In
addition, he was a board member for the Rockefeller
Foundation, the World Economic Forum, the Millennium
Promise, and the Gates Foundation, among several other high-
profile nonprofits and nongovernmental organizations
(NGOs).1 Gupta was also heavily involved in higher education
in India. He was cofounder and served as chairman of the board
for the Indian School of Business, and he was on the dean’s
advisory board for the School of Economics and Management at
Tsinghua University.
After graduating from the Indian Institute of Technology–Delhi,
Gupta attended Harvard University where he earned an MBA
and graduated with distinction; from there he joined McKinsey.
Gupta spent three decades with McKinsey and earned a
reputation for integrity, intelligence, and great business skill; he
achieved remarkable success in the marketplace and was known
across the globe for his business acumen and philanthropic
endeavors.2 McKinsey’s managing director serves a three-year
term and limited to serving three terms. After Gupta’s third
term ended in 2003, he became senior partner again. In 2007,
Gupta became a senior partner emeritus for the firm, where he
continued to serve in an advisory capacity. All of these

8. accomplishments occurred before his arrest and imprisonment
for insider trading.
WHAT IS INSIDER TRADING?
In simple terms, insider trading involves the beneficial use of
nondisclosed, confidential corporate (company) information in
stock trades. According to the U.S. Securities and Exchange
Commission (SEC)’s website, an “insider” is a person who is in
possession of material, nonpublic information about a security
and breaches a fiduciary duty or relationship of trust and
confidence through the illegal trading (buying or selling) of that
security.3 Insiders are key personnel (senior management-level
staff, or those in advisory roles such as members of a board of
directors), but the insider description may also extend to third
parties who provide professional services to a company and may
be privy to their plans and activities.
p.402
Insider trading violations can include sharing (“tipping”)
sensitive information to an uninvolved party. Having insight
into a company’s stock price enables the insider to make trades
that generate above-market financial returns or substantially
avoid financial losses from market fluctuations in stock price.
When an insider is privy to information that is expected to have
a likely positive effect on a company’s share price, the insider
may illegally buy securities in advance of the stock price
increase, taking action before the marketplace becomes aware of
a company’s good news. An example of this is the insider
trading case involving SAC Capital Advisors’ use of
pharmaceutical study results before their release in the
marketplace.4 In other cases, the insider will sell securities
before public disclosure of bad news, thereby limiting potential
investment losses that occur when a security’s price declines in
the market. The Enron senior management team’s use of insider
information before the company’s imminent collapse involved
this type of illegal insider trading.5
Research confirms that insider trading often occurs secondhand
through insider tips received from friends, rather than firsthand

9. where someone effectively uses information he or she has
obtained from his or her work environment.6 When a second
party becomes involved in insider trading by using an insider
tip, it makes the insider trading harder to detect; for this reason,
estimates of the prevalence of insider trading may be inaccurate
(i.e., research suggests that insider trading likely occurs more
often than is known).7 The SEC reports that the number of
insider trading cases grew more, in the aggregate, between 2013
and 2016, than in previous years.8 Because of the covert nature
of this crime, law enforcement agencies use an array of tools,
including wiretapping, to solve these crimes. Preet Bharara,
former U.S. attorney who was involved with high-profile insider
trading prosecution, said, “When sophisticated business people
begin to adopt the methods of common criminals, we have no
choice but to treat them as such.”9
Still, it is important to remember that insiders can legally
purchase their company’s stock. Many managers, in fact,
receive stock options and bonuses based on stock performance.
This makes sense because managers and company employees
who have invested in their company’s stock will have a strong
alignment with the company’s goals and objectives and will be
motivated to see the company succeed. Insider trading laws are
not designed to prohibit insiders from legally trading, but rather
to block the insider’s ability to trade on the nonpublic,
confidential information about a company’s plans and
performance that they have access to through their work.
WHY ALL THE FUSS? WHY IS INSIDER TRADING AN
ETHICAL ISSUE?
Participants in public capital markets benefit from a regulated
and transparent trading environment. To the degree that market
participants trust that the market is a level playing field, they
will invest capital by purchasing stocks and bonds. This
transparency and sense of fair play is secured by policies and
regulations (e.g., those established and enforced by the SEC).
Insider trading (i.e., using information that is otherwise
unavailable to the investing public to make trades) lowers

10. investor trust in the capital markets. When the sense of market
fairness diminishes, investors become reluctant to invest, with
negative implications for economic growth. Hence, the
soundness and trustworthiness of the capital markets matters
greatly. This also helps us understand why the capital markets
are regulated and why laws and regulations have been designed
to protect the marketplace from the damaging effects of insider
trading.
Insider trading is viewed as a critical issue by investors and
market participants for at least three reasons10:
1. If insider trading is widespread, this will influence
investors’ willingness to trade; if investors lose confidence in
the fairness of the marketplace, a loss of both market liquidity
and capital investment may occur.
p.403
2. Policy makers and regulators have concerns about the
effectiveness of insider trading policy and regulations.
3. Senior executives often receive stock options or stock-
related benefits as part of their overall compensation package;
this is done with the intent of aligning manager interests with
shareholder interests. Greater stock ownership by managers,
however, may have the unintended consequence of enhancing
managers’ abilities to take unfair (and illegal) advantage of
their insider status and the nondisclosed, confidential corporate
information they may have.11
HOW IS INSIDER TRADING DISCOVERED?
An insider trading investigation may start with the SEC, the
Federal Bureau of Investigation (FBI), the Department of
Justice (DOJ), or the U.S. Attorney’s Office. Information on
trading irregularity may be discovered and presented to the SEC
and then travel to another branch of the government, or it may
come from the Financial Industry Regulatory Authority
(FINRA), which has a surveillance division that may identify
unusual movements in a stock price. Corporate insiders are
required by the SEC to report trade activity, and because
authorities can conduct surveillance activity on stock trades,

11. corporate insiders may be deterred from conducting illegal
trades in their own names, instead passing the information along
to a friend, business associate, or relative. Thus, their insider
status is concealed even if evidence suggests irregular or sudden
stock price movement.12
Insider trading activity may result in civil lawsuits and related
fines or in criminal charges against the violator. Criminal
insider trading charges are normally contingent on the
appearance of three factors:
1. The significance of the wrongdoing (amount of money
involved, complexity/number of people involved in trade, and
the duration of the insider trading activity)
2. Confirmation of wrongdoing provided evidence (testimony,
taped conversation, or related evidence)
3. Repeat securities violations; recidivism
The DOJ normally handles criminal cases, often working in
collaboration with the SEC. The SEC may notify the DOJ of a
likely criminal case, and the DOJ will then verify the
appropriateness of the charge as part of its handling of the case.
FINRA also presents criminal cases to the DOJ.13
The case against Rajat Gupta came by way of another, more
elaborate criminal insider trading case that was being conducted
against his friend and business partner, Raj Rajaratnam.
Rajaratnam, a hedge-fund manager for a company called
Galleon Group, had attracted the attention of the FBI, which
had placed him and a network of trade conspirators under
surveillance using, among other means, wiretapping.
Investigators captured him on the telephone advising co-
conspirators on how to disguise their insider trading activity.
Among the network of participants, Gupta was identified as an
informant to Rajaratnam. The tips Gupta shared with
Rajaratnam regarding Goldman Sachs and other firms proved
lucrative. Rajaratnam cleared approximately $840,000 in one
day from a tip about plans by Warren Buffett’s Berkshire
Hathaway to invest $5 billion in Goldman Sachs.14 Gupta’s
boardroom leaks to Rajaratnam generated approximately $17

12. million in profits.15 Overall, it is estimated that Rajaratnam
earned over $80 million in profits from insider tips he received
from a broad network of corporate informers.16 As a part of
this network, Gupta faced criminal insider trading charges.
Despite the fact that Rajaratnam’s criminal activity involved
greater dollar figures, commentators on the two cases suggested
that Gupta was a professional of a much higher stature. Because
of his membership on the board of several top companies, Gupta
was in a trusted position to guard the confidential information
of global companies whose decisions and activities affect the
lives of hundreds of thousands of corporate stakehol ders.17 The
many accolades Gupta had received throughout his career made
his indictment particularly shocking. “I think the record, which
the government really doesn’t dispute, bears out that he [Rajat
Gupta] is a good man . . . but the history of this country and the
history of this world, I’m afraid, is full of examples of good
men who do bad things,” said Judge Jed Rakoff, presiding judge
at Rajat Gupta trial.18
p.404
DIGGING DEEPER INTO THE GUPTA STORY
His Friendships
Two names consistently appear in conjunction with Gupta’s
trading activity: Anil Kumar and Raj Rajaratnam. Kumar,
esteemed as Gupta’s protégé at McKinsey, was a technology
consultant and also a graduate of Indian Institute of
Technology. Both Gupta and Kumar were involved with
establishing the Indian School of Business (ISB) and the
school’s ongoing performance. Gupta’s relationship with Kumar
was built through career and direct business dealings.19
Kumar and Rajaratnam both studied at the University of
Pennsylvania’s Wharton School of Business. While still a
consultant at McKinsey, Kumar was approached by Rajaratnam,
a hedge-fund manager, who proposed a secret side-consulting
business for Kumar with Rajaratnam’s firm, Galleon Group.
Kumar agreed to the illicit consulting arrangement with
Rajaratnam, despite the fact that this agreement violated the

13. terms of his employment with McKinsey. Kumar earned
approximately $1 million a year for this arrangement and
eventually became an important source of insider information to
Rajaratnam.20
Through Kumar, Gupta’s and Rajaratnam’s paths merged. Gupta
and Rajaratnam did not share an alma mater, but they did share
an interest in the private equity fund called New Silk Route
Partners that Gupta and Kumar launched. Later, business
associates Parag Saxena and Victor Menezes joined the equity
fund and Kumar exited. Rajaratnam at one point invested $50
million in New Silk Route fund, prompting communication
between himself and Gupta, and the two eventually became
friends and confidantes. During the years leading up to Gupta’s
conviction, Kumar and Rajaratnam occupied important roles in
Gupta’s business activity, and both Kumar and Gupta shared
nonpublic and confidential information with Rajaratnam about
the companies they served in a professional capacity. As a fund
manager, Rajaratnam was able to parlay that information into
quick profits for Galleon Group, to the tune of approximately
$17 million from Gupta’s tips alone. In court, Gupta asserted
that he did not profit from Rajaratnam’s trading activity.21
Sadly, but perhaps not surprisingly, these friendships ended
badly. Kumar ultimately served as a key witness in the criminal
cases against Rajaratnam and Gupta. Kumar himself was
convicted of securities fraud, fined $2.8 million by the SEC and
sentenced to 2 years of probation.22 Rajaratnam was convicted
on 14 counts of conspiracy and securities fraud, and sentenced
to 11 years in jail and $150 million in fines.23
The Gupta Insider Trading Trial
Gupta’s trouble with the law began on March 1, 2011, when the
SEC filed a civil complaint for insider trading against Gupta
and Rajaratnam. Later, on October 26, 2011, the U.S.
Attorney’s Office filed criminal charges for securities fraud
(including insider trading) against Gupta. He was arrested and
released the same day on $10 million bail. At that time, Gupta
asserted that he was not guilty, but he faced an uphill battle

14. because his deep involvement with Rajaratnam was drawn out
and put on display during Rajaratnam’s trial. Wiretaps used on
Rajaratnam captured Gupta actively sharing insider tips with
him.24 In addition, in Rajaratnam’s trial, the chief executive
officer (CEO) of Goldman Sachs testified that Gupta shared
confidential information about the firm with Rajaratnam. Even
though Gupta was not on trial at the time, he was identified
during that trial as a key informant to Rajaratnam.25
p.405
Gupta’s jury trial began on May 22, 2012.26 By June 15, 2012,
Gupta was found guilty on three counts of securities fraud and
one count of conspiracy for sharing confidential information
with Rajaratnam; he was found not guilty on two other
securities fraud charges.27 The jury took less than 2 days to
reach its verdict, and it relied on phone and transaction records
rather than the wiretaps that were used in Rajaratnam’s
trial.28 Gupta faced a maximum sentence of 20 years in prison
for securities fraud and 5 years for conspiracy.29
The attorneys prosecuting the case pushed for a 10-year prison
term for Gupta, with one prosecuting attorney stating, “Gupta
intentionally betrayed his duties to Goldman Sachs as a director
of the company, refused to take responsibility for his actions,
and put the government through a long and exhaustive trial,
costing taxpayers millions.”30 Gupta’s punishment was part of
a message the prosecutors hoped to send to the marketplace that
people entrusted to serve in a fiduciary role for corporations
will be held to the highest standards of professional
conduct.31 The severity of the proposed prison sentence
underscored the magnitude of the professional responsibility
that Gupta had betrayed.
Meanwhile, Gupta’s attorneys fought for probation and
community service that would leverage his extensive business
skills. Gupta’s attorney argued that Gupta’s offense was
“aberrational behavior” for him—normally an upstanding
member of the community—and that Gupta should not be
punished because he had suffered a “fall from grace of Greek

15. tragedy proportions.”32 “This was an iconic figure who had
been a role model for countless people around the globe,” his
attorney argued.33
On October 24, 2012, Judge Rakoff of the U.S. District Court in
Manhattan sentenced Gupta to 2 years in prison.34 Though
Gupta appealed the conviction, it was upheld by a federal
appeals court on March 25, 2014. On June 11, just one week
before his jail term began, the U.S. Supreme Court denied
Gupta’s request to postpone the prison time while an appeal was
in process. Gupta began his jail sentence one week later, on
June 17, 2014.35
The Question of Motive
The question of motive for Gupta’s crime remains unanswered,
though speculation abounds. In one recorded conversation, his
friend Kumar suggested to Rajaratnam that Gupta was
dissatisfied with his level of wealth and desired to join the more
financially elite.36 Before his involvement with insider trading,
Gupta’s net worth was estimated at $130 million.37
Alternatively, a senior attorney for the SEC involved with the
case suggested that it was not money that Gupta was after, as
evidenced by the fact that Gupta did not receive a cut or a
payment in exchange for the tips he provided; rather, the
attorney suggested, the motive for Gupta was friendship.38
Providing yet a different perspective on motive, Judge Rakoff
speculated that Gupta may have crossed a professional line that
resulted in criminal activity because he “longed to escape the
straitjacket of overwhelming responsibility, and had begun to
loosen his self-restraint in ways that clouded his judgment.”39
It seems likely that the question of motive for Gupta was a
complex and multifaceted one. It is not feasible, however, that a
person who had spent a lifetime guarding the confidentiality of
high-profile companies was unaware of the potential
ramifications of sharing corporate secrets. During his career,
Gupta likely signed dozens of confidentiality agreements in
which he committed himself to protect and guard from public
disclosure the organizational information of the companies he

16. served. It therefore appears certain that Gupta’s decision to
divulge confidential information was not the result of
inexperience or a lack of understanding about the potential
consequences of his actions.
The Monetary and Reputational Costs Gupta Incurred for
Insider Trading
Before his conviction, Gupta’s net worth was estimated to have
been approximately $130 million.40 The insider trading
conviction was costly for Gupta. Some of the expenses he
incurred included these:
p.406
• A 2-year jail sentence41
• A lifetime ban by the SEC on serving as an officer or
director of a public company42
• $30 million in legal fees43
• $25.8 million in fines and penalties as follows:
○ $5 million fine, paid to the U.S. government44
○ $6.2 million reimbursement of legal fees to Goldman
Sachs45
○ $13.9 million reimbursement to the SEC for legal
activities46
EPILOGUE: WHERE IS RAJAT GUPTA TODAY?
On January 5, 2016, Rajat Gupta was released from federal
prison to his Manhattan home to finish out his jail sentence
under house arrest.47 The house arrest ended in March
2016.48 In addition, in February 2016 the U.S. Second Circuit
Court of Appeals in Manhattan agreed to hear Gupta’s appeal to
overturn his conviction, and as of September 2017 the appeal is
still being reviewed.49 Upon release from prison, Gupta
disclosed plans to publish an autobiography about his life and
experiences.50 Gupta also returned to rekindle relationships
with close colleagues and a large professional network around
the world. It seems likely that Gupta’s impact on business and
society will persist, though the avenues he travels may diverge
from where he had traveled in his former life.
See Table 1 for a timeline of events follows.

17. TABLE 1 A TIMELINE OF EVENTS*
p.407
Source: Rawat, S. R., Raj, V., Manoharan, A., & Vineet, S.
(2013). Rajat Gupta: An American dream upturned: A case
study. Indian Journal of Corporate Governance, 6(2), 42–51.
Critical Thinking Questions
1. Research suggests that different countries have different
perspectives on insider trading. Gupta and his friend, Kumar,
were originally from India; Rajaratnam was from Sri Lanka. An
aspect of their willingness to engage in insider trading might be
rooted in their culture of origin. Does this information alter
your perspective on the conduct of the three? Would it make
them somehow less guilty of the crime? Explain.
2. When Gupta’s case went to trial, over 400 people wrote
letters to the judge attesting to his good character—among them
Bill Gates and former UN Secretary Kofi Annan. That said,
Gupta’s business partners in his New Silk Route private equity
venture had received penalties from the SEC before their
involvement with him for dubious business dealings. Is this
simply a case of poor selection of friends, or was something
else going on with Gupta that, though undetected for
years,culminated in his shady business dealings in the later
years of his life? Explain. If it is true that bad company corrupts
good character, how might you effectively use this information
as you select friends and associates in the business arena?
3. Illegal insider trading is considered an ethical issue, in part,
because it involves fair play and justice. Some research
indicates that there is no one particular profile for those willing
to engage in illegal insider trading, but other research using
simulation testing suggests that individuals with lower ethics
scores are more likely to engage in illegal insider trading. If
both studies are true, what does this suggest about building an
ethical organization? With these studies in mind, what
workplace practices might you consider endorsing?
4. If it is true that the use of insider trade tips from friends is

18. difficult to detect and that those who get charged with insider
trading seem to bounce back in society fairly well (e.g., Michael
Milken, Mark Cuban, Martha Stewart), is it worth it, in your
opinion, for our regulatory agencies to seek out illegal trading
activity and to prosecute violators of these laws? How do you
rationalize the great expense involved in these search and
prosecution efforts if the criminals seem to suffer no lasting
ramifications from these crimes?