Week 2 Business Research Ethics
RES351/Quantitative Analysis for Business
February 9, 2014
Citigroup, Inc. is a well diverse financial services company, which provides various financial needs to corporate customers, as well as individual consumers. Citigroup divides the services offered into three business segments, which are Corporate and Investment Banking, Global Wealth Management, and Global Consumer. They also have several umbrellas, which include CitiFinancial, Citibank, Primerica, Solomon Smith Barney, Citi, and Banamex, have many years of innovation and success within their industry. Even though they have many successes, they have not been excluded from investigations, corporate scandals, or legal settlements. For example, in 2001, an investigation started through the New York State Attorney General Eliot Spitzer office, with claims of potential conflicts of interest within Citigroup’s investment banking practices. In 2003, the investigation had been resolved with a settlement of $400 million paid to consumers, also requiring Solomon Smith Barney to adopt corporate changes and a series of reforms.
Many Wall Street securities firms, including Citigroup, Inc. were accused of misleading investors. The securities firms’ research divisions were responsible for the misconduct. The analysts sold stock they knew were not of good deals based on their biased research. Legitimate research had been completed, yet ignored by the analysts because of possible backlash from the investment bankers. To ensure analysts sold stocks that were not of good value, the investments departments within these companies offered bribery of stock options, as well as additional bonuses. This was fueled by corporate greed and showed a zero regard for ethics and good business practices. This investigation exposed how the research and stock ratings provided by the analysts were not presented with honestly.
SSB provides business practices, which encourage...