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Date: 4

June, 2005


Stock trading is a fast and competitive business. Situation can change
within minutes and results in trillions. Setting off chain reactions which
not just affect the investors, but also shape the atmosphere of our
society, change the lives of the common people.

As the worlds leading trade centers, both Wall Street and Hong Kong,
they both have comprehensive rules and regulations to serve and protect
their trade deals. Legislations which in their own views, fair and
competent, sufficient to provide non-discriminatory and transparent
trades within their markets.

As the trade markets grow larger, more rules and legislations will be
implemented. However, will these really protect the ones which they
intended? You must know all the rules properly, so you can break them
Laws are too often used or abused by people who know how
to use them, since there are always ways to get around regulations
legally. (A classic example, Euron, which was mentioned in the case
study) Therefore another set of boundaries is needed besides the word
Ethics should comes into play, especially to the people whos
decisions can affect the markets.

Case vs. Ethical Frameworks

1. Chairman Mr. X of a Hong Kong listed company, broadcasted via
media that his company would have 10% increase in net profit without
auditors verification. This already breached the requirements of The
Securities and Futures Commission (SFC), which is the regulatory body
of the Hong Kong stock market. As a result, his company had to justify
his comments as his own opinion the next day to avoid any future
legal liability. However, his actions might have already affected the
stock price.

2. Chairman Mr. Y of another Hong Kong listed company, also
broadcasted his companys three year profit predictions to the public.
However, it is considered to be completely legal and appropriate since
Mr. Y made full use of the three year prediction clause which is stated
in the requirements of the SFC.

3. Company Z organized a private meeting which announced their stock
price affecting information. However, company Z cannot be convicted
since those ones who received the information (which may leads to
benefits) would not come forward to stand trail.

These cases circle around three different situations on the subject of
should price affecting information of stocks allowed to be broadcasted
in Hong Kong? However, all three companies announced information
via different methods yet all successfully avoided any legal
responsibilities. Therefore ethical frameworks should be introduced to
explore, analyze and justify their actions.

The actions of Mr. X or Mr. Y (hence Mr. Y is only using a legal
loophole in the system) are considered to be wrong to many people,
since these actions also have already affected their companies
reputations and the general publics interest. However, by using Egoistic
Hedonisms Cyrenaicism which argues that My pleasure is the highest
good, then their actions can be considered to be totally acceptable.
Since Mr. Xs and Mr. Ys intentions might be to gain monetary
benefits, or just simply to publicize the fact that they have the power to
broadcast important information to satisfy their own egos.

Moreover, if a Basic Teleological framework is used which based on the
arguments that anything that result in over increase in happiness is a
good thing, then all Mr. Xs; Mr. Ys and Company Zs behaviours are
entirely suitable. Since making profits for their companies or for
themselves will increase their happiness. Furthermore, they can be
auxiliary supported according to Milton Friedmans theory there is only
one social responsibility of business; which is to use its resources and
engage in activities designed to increase its profits.

On the other hand, if Utilitarianism is used to analyze the cases of Mr.
X; Mr. Y, and Company Z, their acts are immoral since it only leads to
the benefits of a small population which are simply the shareholders or
investors who can access these information before the stock prices go
up, and not the general investors. (Hence the general investors could be
buying stocks more than they should pay for after the prices have gone
up because those information might not be accurate).
Given that Utilitarianism is a theory based on a moral principle that
holds that the morally right course of action in any situation is the one
that produces the greatest balance of benefits over harms for everyone
affected. According to utilitarianism, the ethical action is the one that
provides the greatest good for the greatest number.

Then how about if these cases are looked at in a boarder aspect? In the
aspect of the whole stock market system. Based on the theory
of Universality Argument, Act in such a way that the subjective
principle can become a universal law. If all listed companies abuse the
system and broadcast faulty information about their profit predictions,
then the stock exchange system will collapse since no one will trust any
values of any stocks.

In spite of all the consequential and deontological ethical frameworks
used above to analyze these cases, what if all are to be ignored and just
simply focus on the basic Virtues as human beings. E.g. Chineses
Daoism or Ancient Greek, Platos four Cardinal Virtues which states
that all should have Fortitude; Temperance; Justice with fairness and
honesty and Prudence. Then their actions can be considered as sinful,
especially with the cases of Mr. X and Company Z. In views of the facts
that their broadcastings were done without temperance nor self-control;
without fairness or honesty for the public; and total recklessness in the
sense of lacking consideration for the health of the stock exchange
system as a whole.

To broadcast or not to broadcast? This question seems to be the focal
point of this case. And supposing-ly, an answer is to be generated after
in this conclusion, or is it? However as we can see, there are always
ways to get around regulations legally, as all cases avoided committing
any offenses. Even with ethical frameworks analyses as excised above,
there were to be two sides of the story for each situation depending on
the ways a person exploit or manipulate these so called ethical

So what is the conclusion as I question myself after these extensive
analyses? As United States and Hong Kong, both as the worlds leading
stock markets already have opposite standards and views on this matter,
so can there be a correct or incorrect answer in these cases? Moreover,
who am I to comment the right or wrong of another persons ethical
believes based on my own ethical views?

Nevertheless, I do believe that every human being should have an ethical
believe to follow. Although everyone else might not agree with it, at
least it can act as a guild line to a person. Moreover, as ones power and
influential capability increase in the society (as were the cases of Mr. X
and Mr. Y), this person owes this society and other beings greater
responsibilities. Therefore such person should acknowledge the
importance of ethics, try to adopt a set of ethical or religious believes to
follow in order to maintain a balance and harmony within our