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The case of Galleon Group exemplifies the ethical pitfalls that can profoundly shape the decisions of entrepreneurs and financial managers. This scandal broke out because Rajat Gupta passed private information about mergers and quarterly revenues of different companies to a hedge-fund manager, Raj Rajaratham. In turn, this activity enabled these people to earn more than 33 million during two years. Later, the Securities and Exchange Commission accused these individuals of corporate fraud and insider trading. Moreover, this accusation led to their conviction. These are the main elements of this case.

Researchers define insider trading as either buying or selling stock by people who possess private information about its future value. Such activities usually enables individuals to derive substantial benefits from these financial transactions. Moreover, inside trading can deprive potential investors of their savings, especially if they buy stocks that can soon depreciate. Insider trading is illegal in most advanced countries like the United States or the United Kingdom, This is the policy that legislators currently adopt. Moreover, this activity contradicts various ethical models, which decision-makers can use.

One can analyze insider trading with the help of different ethical frameworks. For instance, it is possible to apply a utilitarian approach. According to this theory, an individual should focus primarily on the consequences of their actions, rather than their motives. Thus, people, who take part in insider training, deprives investors of the potential profits or even their life-long savings. For example, due to Enron fraud, many people purchased stocks, which proved to virtually worthless. This is why utilitarian ethics cannot justify such financial practices.

Second, one can apply deontological ethics in order to discuss insider trading. The supporters of this approach lay stress on the need to comply with existing social norms. Therefore, people like Rajat Gupta or Raj Rajaratham act immorally even if the consequences of their actions are beneficial. Although, Rajat Gupta may spend this money on philanthropy, from a deontological perspective, this pretext is not sufficient for justifying insider trading. The problem is that such an action violates the duties of a moral individual. So, people should not overlook this issue when making their ethical choices.

Furthermore, it is possible to use the virtual ethics. In this case, one should focus on the qualities that a certain behavior embodies. For example, insider trading can represent secrecy, unscrupulousness, and willingness to earn money at the expense of others. Moreover, people, who take part in insider trading, disregard the welfare of other people. Therefore, in this case, one can speak about complete irresponsibility and unwillingness to put oneself in the position of other people. Thus, such attributes are not typical of ethical individuals who do not disregard the needs of other people.

Finally, one can apply such a concept as veil of ignorance. This notion means that a person should judge the morality of an action from an impartial position. In other words, a judge should not side with any of potential stakeholders. Thus, a judge should consider the impact of an activity on various stakeholders. For instance, one can speak about employees, shareholders, investors, and many other stakeholders. In this case, investors will run a significant risk. Therefore, insider trading is not acceptable. So, existing ethical models are not compatible with insider trading. These are the main arguments that one can advance.

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