4. Silverman Sachs is an investment firm providing both advisory and investment banking services. One of...

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4. Silverman Sachs is an investment firm providing both advisory and investment banking services. One of Silverman Sachs investment banking clients, TenPenny (a high-tech firm which specializes in online games), wants to raise its stock price to facilitate a private offering, for which it will be using Silverman Sachs as its placement agent. Joe works for Silverman Sachs as an investment adviser. To assist TenPenny with its plans, Joe solicits several of his advisory clients to buy TenPenny stock, and at the same time solicits other clients to sell TenPenny stock, frequently effecting matched orders among his customers. For a 10-day period, these trades represented 45% of the total market volume of TenPenny, and the price of the stock increased from $15 to $24 and then stabilized at $22 for the next several days. a) Name the parties that Joe owes his duties to in this case. [3 marks] b) There are at least two ethical issues relevant to this case. Name two and explain why they are the issues of this case. [3 marks] c) Joe justifies his actions by the following reasons. Please comment why they are incorrect with thorough explanation. I acceptable if the purchase and sale of TenPenny stock fit within each of his advisory clients' Investment Policy Statements (IPS). II. acceptable because he was acting to promote the interests of his client. TenPenny. III. acceptable as long as he discloses to his advisory clients Silverman Sachs investment banking relationship with TenPenny. c.I) Explain in detail why Choice I is incorrect. c.II) Explain in detail why Choice II is incorrect. c.III) Explain in detail why Choice III is incorrect. ===== [3 marks] [3 marks] [3 marks] 4. Silverman Sachs is an investment firm providing both advisory and investment banking services. One of Silverman Sachs investment banking clients, TenPenny (a high-tech firm which specializes in online games), wants to raise its stock price to facilitate a private offering, for which it will be using Silverman Sachs as its placement agent. Joe works for Silverman Sachs as an investment adviser. To assist TenPenny with its plans, Joe solicits several of his advisory clients to buy TenPenny stock, and at the same time solicits other clients to sell TenPenny stock, frequently effecting matched orders among his customers. For a 10-day period, these trades represented 45% of the total market volume of TenPenny, and the price of the stock increased from $15 to $24 and then stabilized at $22 for the next several days. a) Name the parties that Joe owes his duties to in this case. [3 marks] b) There are at least two ethical issues relevant to this case. Name two and explain why they are the issues of this case. [3 marks] c) Joe justifies his actions by the following reasons. Please comment why they are incorrect with thorough explanation. I acceptable if the purchase and sale of TenPenny stock fit within each of his advisory clients' Investment Policy Statements (IPS). II. acceptable because he was acting to promote the interests of his client. TenPenny. III. acceptable as long as he discloses to his advisory clients Silverman Sachs investment banking relationship with TenPenny. c.I) Explain in detail why Choice I is incorrect. c.II) Explain in detail why Choice II is incorrect. c.III) Explain in detail why Choice III is incorrect. ===== [3 marks] [3 marks] [3 marks]

Answer rating: 100% (QA)

a Joe owes his duties to multiple parties in this case First he owes a fiduciary duty to his advisory clients to act in their best interests and provi... View the full answer