INVESTMENT BANKING CULTURE & FRAUD

This study investigates the question: Do investment banks, because of their internal culture, lend themselves to the acts of fraudulent behaviors by some employees? This question is investigated through the testing of a related hypothesis. The HoHA research approach is followed in the formulation and testing of the hypothesis. The hypotheses are as follows:

Ho: There is no relationship between investment banking culture and acts of fraudulent behavior on the part of some employees of investment banks.

HA: The investment banking culture both facilitates and encourages some employees of investment banks to engage in acts of fraudulent behavior.

The hypothesis is tested and the research question is investigated through a review of high profile event in the investment banking industry over the past few decades. Investment banking is reviewed briefly in the following section, and this review is followed by a review of investment banking culture as reflected in selected high profile cases, including those of Michael Milken, Ivan Boesky, Nicholas Leeson, and Toshihide Iguchi.

The major operational functions of investment banking firms are u

. . .
othing halfway" (Lagnado, 1987, p. B1). Additionally, Boesky is frequently characterized as prescient. Some of his foreknowledge undoubtedly derives from his ability to correctly analyze and project situations. In many of his business dealings, however, his ability to know what was likely to happen resulted from his careful cultivation of those people who could and would provide him with the necessary insider information. Throughout his life, Boesky has tended to pursue only a few activities simultaneously, because any activity in which he is interested typically is pursued with a religious fervor. His stock trading activities, as an example, consumed about 21 hours per day. Ivan Boesky "became the best and most flamboyant trade on Wall Street" (Lagnado, 1987, p. B1). His specialty was arbitrage, and he accomplished his seeming miracles through trading on insider information. Arbitrage refers to purchases in one market, and sales in another market, which, together, have the effect of maintaining the prices of comparable items traded in the affected markets within the limits defined by the cost of buying the items in one market and selling them in another. Thus, it can be seen at once that the use of arbitrage is intended
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Some common words found in the essay are:
Pugel White, Firm Firm, Ivan Boesky, FRAUD Introduction, Michael Milken, Street Lagnado, Baa Junk, Wall Street, Milken Leeson, Investment Banks, investment banking, ivan boesky, investment bank, investment banks, junk bond, michael milken, investment banking culture, junk bonds, banking culture, bruck 1988, wall street, pugel white 1995, investment banking industry, simultaneous buy/sell contracts, junk bond market,
Approximate Word count = 2730
Approximate Pages = 11 (250 words per page)

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