Introduction
I chose to do this experiential activity on one of my favorite movies, Wall Street: Money Never Sleeps. This is the sequel to the original Wall Street movie made in 1987, where Gordon Gekko’s and Bud Fox’s greed send them straight to prison. Gordon Gekko was a big time trader who traded primarily on inside information until he was caught and sent to jail. The sequel, just like the original, focuses on the greedof stage 2 driven people in relationship to Wall Street, but there are many other business ethics issues involved in the movie. Gordon Gekko’sdaughter and her boyfriend, Jake Moore,get involved in the new plot. When family and love get involved with greed it only further complicates things, and this is illustrated in the movie. Jake Moore is accused of being an idealistic stock broker by many of his coworkers and friends, many of which are stage two thinkers, as defined by Kohlberg. One of the greediest people in this movie is Bretton James. Bretton is the head of a largecompetitor named Churchill Schwartz.
Portrayal of the Business World
The business world portrayed in this movie is very greedy, competitive, and fast paced. Overall, this puts the Wall Street line of business in a negative light. After watching the movie, I can see why someone would think negatively toward Wall Street. One good example is the presentation of Jake Moore’s bonus check. He is relatively young in this movie, and his bonus check was over a million dollars. Many people view a young person receiving that much money as nothing but bad news—often thinking that no one should be getting a check that large. Finally,an innocent movie watcher would see that he is making his money by investing someone else’s money. This is a contentious issue in today’s world. Bretton James, says, “You don’t need inside information anymore to make money, all you need to do is stay out of jail.” This quote suggests that making money in the stock market is easy. He suggests to the person whom he was speaking to, Gordon Gekko, that jail should have been avoided in order to continue to gain immense wealth. We all know that making money in the stock market is not that easy; if it was, everyone would be doing it for a living. By the end of the movie you learn that Bretton James actually made his money through illegal means and is placed under investigation. As for the competitive and fast paced side of the business the movie demonstrates employees working around the clock, maximally stressed, and clawing for promotions. Jake Mooreis constantly battling for money from investors, key information, and respect from his peers. In a scene early in the movie, Jake and a fellow analyst go head to head for the investment idea of the day. They bring up each other’s past failures and shortcomings in the process to try and gain any advantage. Jake’s boss, in a different scene, becomes so upset that his company is failing that he commits suicide by jumping in front of a train! I’m sure that it does not get more intense than that.
Business Ethic Dilemmas
False rumors were deliberately spread several times in this movie to influence trades in the market. Early in the movie, Jake Moore spreads a rumor about a competing firm losing money in an oil company, due to nationalization of oil fields. The reason he spreads the rumor is because he believes the CEO of this company spread false accusations about Jake’s company ultimately killing the company and the CEO, revenge! Jake ends up costing his competitor $127,000,000 or 8% of their total stock price. Was this illegal? In many ways, yes; however, it is not easy to prove that someone spread a rumor unless you have hard evidence, and this is the main reason many people continue to do this in the business world. Little evidence was presented in this case, and more importantly, Jake Moore did not make any money by spreading the rumor. It only made it harder for a court to find a motive. His competitor, Bretton James, finds out that Jake started the rumors and invites him over to discuss the issue. Bretton says that the money is not actually what matters and that he wants to hire Jake to work for him because he is impressed in his guts. Jake agrees so that he can secretly do further damage to the company. By the end of the movie, Jake Moore discovers enough about Brettonto ruin his career and place him under investigation by exposing a news story about Bretton.If I were Bretton, I would not have hired Jake knowing what measures he was willing to go to in order to harm the company. I would have handed Jake over to the officials, even if there was a slim chance that Jake could have been charged with anything. At least by doing this, you would make an example out of Jake. Jake did have a good reason for spreading this rumor, but I don’t think people should ever have to lie in order to make a point to the public. I think there needs to be more strict guidelines with respect to lying in the business world. I realize how hard this may be to enforce, but at least with something in place people would consider the penalties they face.
The second ethical dilemma I chose to examine was choice of money over family. Gordon Gekkowas sent to jail in the original Wall Street movie and returned back to society without the support of any of his family in the new movie. No one was waiting for him on the other side of the fence when he was released because he put money above his family. Not only does he put money above his family but also above any friendship he had. It is apparent that he measured every relationship he had by the amount of money it generated for him. Even with all of the stock talk in the movie the mention of family and what is important is an underlying theme. Jake Moore makes contact with Gordon Gekko, so that his girlfriend, Winnie Gekko, can piece her childhood memories back together. Jake makes it clear that he is only in contact with Gordon for this reason and Gordon plays along. Later in the movie, it is revealed that Winnie holds a large amount of Gordon’s wealth, which he gave to her before he went to jail. Gordon says that Winnie agreed to give it back to him once he got out of prison but she reneged on the agreement while he was in jail. This was the momentwhen it made sense to me why Gordon was so interested in reconnecting with his daughter. By the end of the movie,Gordon convinces Jake and Winnie to give Gordon the money so he can launder it into the states where he will give it back to them. When Gordon receives control of the money he does not do this and saves the money for himself to open up his own investment firm. In a last ditch effort, Jake attempts to sway Gordon by showing him an image of his unborn grandson. This gesture finally sways Gordon, and he agrees to send the money. This issue should have never existed. Gordon should have realized when he went to prison that money is not the most important thing,and that he should have found any good that was left in his life. Money is what got him in prison in the first place, after all. I would have put the events that got me in jail in the past and moved on with my life. I would have tried to do something good with my life so that I could say that I turned my life around and made the best out of the situation.
The third ethical issue I would like to examine in this movie is the decision by the Federal Reserve not to bail out the company, Keller Zable. This was the company that Jake Moore and his boss who committed suicide worked for. In the movie the Fed argued that the firm was much too leveraged and reckless. The company should have known better than to extend itself as it did. To put it simply, the firm made far more bets on the market than it could cover. Upon rumors that surfaced (rumors that Bretton James started) revealing the company’s balance sheet, the market disapproved and began dumping company shares. Louis Zabel, Jake’s boss, made the argument that every other investment bank had the same market exposure that his firm had, and that if the Fed refused to save his firm, they would have to do the same with every other bank. This argument was exactly correct and was based off what happened in the financial crisis. The Fed decided to save a few of the first firms that failed just as the market expected, and when it didn’t save another bank that failed, the market panicked. The market didn’t know what would happen to the rest of the financial institutions. In the end, the Fed wrote the rest of the banks larger checks than anyone could wrap his or her mind around. If the Fed didn’t provide them with support, the result would have been a financial depression of unheard of proportions and possibly would have propagated a global meltdown. The amount that the Fed gave to the banks was too much, but they had to give it to them. The banks should not have ever been in this position in the first place. Regulations were unwound to the point where investment banks were back to the time before the great depression. They didn’t have to answer to anyone and could invest in whatever they wanted. Hindsight is twenty twenty and if it were up to me I would like to say that I would never let it get so out of hand, but the fact is that I am human, too. If I had Allen Greenspan telling me what to do at that time, I would probably have listened just like everyone else. If I was in the Fed’s seat after the crises, I would have written a smaller check, with a pay-back promise.
Other issues that I had considered writing on were; moral hazard, insider trading, and leverage. I still don’t fully understand moral hazard, but from what I can gather, it is the tendency for a company or an individual to take on more risk because they will not feel the costs. This phrase was mentioned more than a few times when the characters were discussing the banks being bailed out by the Fed. This phrase, if I am not mistaken, underlines the entire argument. Why would the banks not take on more risk if the Fed would bail them out in the end anyways? Insider trading was covered very thoroughly in the first movie so I did not want to cover it in this movie review. Insider trading is not a thing of the past, and it will continue to happen as long as greed is ingrained in the human brain. One of the largest cases of insider trading was cracked just last October. Raj Rajaratnam’s trades on insider information resulted in $74 million profits. Finally, leverage is a very sensitive argument in the current market. Leverage says that I can be exposed to a million dollars of market exposure by putting as little as twenty thousand dollars down. Even though the investor can only lose the money that the person or company has in the bet, it has placed many financial institutions and people in terrible situations. It has forced many overly confident investors to put all of their investments in one basket.
What I Learned
I learned a lot through doing this exercise. I learned that business situations can spin out of control in no time at all. You have to be constantly reevaluating why you are doing the things that you are doing and why you are putting yourself in certain positions. Many Wall Street investors become much too greedy and let money take over their lives. I learned that there are many things much more important than money in life, and that you must keep your family close to your heart because no matter what happens they will be all you have left in the end. I also learned that as much as we want to blame someone for our problems, we are often times just as much to blame.