The Prisoner’s (Hedge Fund) Dilemma

CO2

SAC Manager Arrested for Insider Trading at Hedge Fund. When your focus is strictly on making money (not serving a larger, more selfless purpose), the rules seem to be more like guidelines and ethics is simply a class you took in college. If you speak to most hedge fund managers, they will tell you what they create is efficient markets. The payoffs hedge fund employees are real, but the business has the feel of a game. by Gary Cohen.

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UNDERSTANDING IS A POOR SUBSTITUTE FOR CONVEXITY (ANTIFRAGILITY): A Conversation with Nassim Nicholas Taleb

First Friday Book Synopsis

Here is another in the CONVERSATIONS AT EDGE series, in this instance a conversation with Nassim Nicholas Taleb. “The point we will be making here is that logically, neither trial and error nor “chance” and serendipity can be behind the gains in technology and empirical science attributed to them. By definition chance cannot lead to [.].

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How Hedge Funds Create Criminals

Harvard Business Review

Hedge funds are playing the role of Wall Street villain again. Then came the November 22, 2010 raids of three hedge fund headquarters by FBI agents who seized documents and confiscated BlackBerries. Now authorities are serving subpoenas on other, larger hedge and mutual funds. These events raise suspicion that many hedge fund traders may have succeeded at beating the market not through careful research and original analysis but by breaking the law.

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What If Google Had a Hedge Fund?

Harvard Business Review

Acutely aware of the competitive edges timely data offers sophisticated investors, the company's ever-entrepreneurial cofounder once proposed that Google launch a hedge fund. Google may not have a hedge fund, but it's unlikely that high IQ hedge funds aren't using Google's data to better manage their own situational awareness and risk. What kind of hedge funds might an Amazon set up (remember, Jeff Bezos actually came from a New York hedge fund)?

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The Man Who Is Changing The World.

Rich Gee Group

He started the Khan Academy as a way to tutor his cousins remotely — while he was a hedge fund analyst in Boston, and they were students in New Orleans. It was clear there was a huge unmet need, so Sal left his hedge fund job and started Khan Academy with the mission of providing a free world-class education to anyone, anywhere.

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Why It’s So Hard to Train Someone to Make an Ethical Decision

Harvard Business

One of the conundrums of ethical decision making is that many moral decisions that are quite straightforward — even easy — to resolve in a classroom or during training exercises seem far more difficult to successfully resolve when confronted during actual day-to-day decision making. There are three obstacles that make ethical decisions in the workplace different and more difficult than in training simulations. Ethics Decision making Transparency Digital Article

An Oxymoron: $1-to-2 Billion Penalty With No Wrongdoing

Coaching Tip

Hedge-fund group SAC Capital Advisors LP and federal prosecutors have agreed in principle on a penalty exceeding $1 billion in a potential criminal settlement that would be the largest ever for an insider-trading case, according to people familiar with the matter. Many know that there is something very wrong in their country , but do not know just what it is in Wall Street, international banks and the lack of timely and ethical governance.

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First Impressions Define Your Success.

Rich Gee Group

Pretty soon, I’ll need hedge clippers from Black & Decker. home about rich our team news our fans services executive coach business coach speaking inspire media knowledge books affiliates contact Rich Gee Group 203.500.2421 First Impressions Define Your Success. Okay, I lied. Many things define your success. But one of the more important elements of initial and continued success are the ways other people perceive us.

Sustainable Leadership and Organizations: The Ideas of Martin Seligman

Michael Lee Stallard

2 Comments so far william czander on May 31st, 2010 Happiness coaches are part of the great conspiracy that began some 20 years ago when CEO’s , hedge fund managers and bankers discovered if they outsourced jobs to China and India it would increase the bottom line and they would all get rich.

Uber Is Finally Realizing HR Isn’t Just for Recruiting

Harvard Business

That is like setting up a finance organization to do exotic risk hedging before putting in place basic reporting and compliance. No board would allow a finance function to focus exclusively on investor reporting or risk hedging, but this type of mistake is all too common when it comes to HR. As my colleague Ian Ziskin has noted, an entrepreneurial, agile, and performance-driven culture is not a substitute for an ethical, courageous, and people-friendly culture.

SAC and the Strange Focus on Insider Trading

Harvard Business Review

Five years after a financial crisis that, as best anybody can tell, had almost nothing to do with insider trading by hedge funds, the two biggest post-crisis criminal crackdowns on the financial sector in the U.S. insider trading by hedge funds. against SAC founder and chief Steve Cohen, but on Thursday he charged the hedge fund itself with "insider trading that was substantial, pervasive, and on a scale without known precedent on the hedge fund industry.".

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Great Leaders Make Decisions | N2Growth Blog

N2Growth Blog

It was Andy Grove the former Chairman and CEO of Intel and Time Magazine’s 1997 Man of the Year who said “You have to take action; you can’t hesitate or hedge your bets. I am always so refreshed by the centrality of ethics, doing the right thing, and people as capital – in your work!

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What It Will Take to Change the Culture of Wall Street

Harvard Business Review

One of the changes I document in the book is how Goldman drifted from a focus on ethical standards of behavior to legal ones — from what one “should” do to what one “can” do. This kind of interdependence has the potential to move the focus back to ethical standards of behavior instead of just legal ones. Compensation Ethics Finance William C. Dudley, the president of the Federal Reserve Bank of New York, gave a speech Monday in which he used the word “culture” 45 times.

Do Commodities Speculators Make Things Cost More?

Harvard Business Review

Markets that existed mainly for the convenience of industry have become dominated by exchange-traded funds, hedge funds, and investment banks. Commodities-trading rules and customs that date back to the pre-financial era may not fit the more aggressive tactics of hedge funds and investment banks. Ethics Finance Global business Commodities trading, Adam Smith wrote in 1776 , was a boon to efficiency and a foe to famine.

Are You a Role Model?

Harvard Business Review

Is there any head of a hedge fund who has stood up publicly, the way Warren Buffett now has, and said, "It's absurd that I should be paying lower taxes than someone who earns $30,000 a year"? Ethics LeadershipIt's impressive that Warren Buffett has earned billions of dollars.

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Why Bankers Need to Be Put Into Little Boxes

Harvard Business Review

There's a beguiling little moment in the financial-crisis documentary Inside Job where hedge fund billionaire George Soros describes the principles of oil tanker design. Compensation Ethics FinanceIf a tanker consisted of one big tank of oil, the sloshing liquid would soon capsize the vessel, Soros explains. So tankers are comprised of lots of smaller, separate tanks, which keeps the sloshing in check and the ships afloat. Financial markets are like that, Soros goes on.

Why the Fed Is So Wimpy

Harvard Business Review

That’s why rich people can invest in hedge funds while, for the most part, regular folks can’t. Ethics Finance Government Regulatory capture — when regulators come to act mainly in the interest of the industries they regulate — is a phenomenon that economists, political scientists, and legal scholars have been writing about for decades. Bank regulators in particular have been depicted as captives for years, and have even taken to describing themselves as such.

Enough is Enough

Harvard Business Review

At least seven hedge fund managers earned more than $1 billion just in 2009. Ethics Managing yourselfFive years ago in The New York Times Magazine, the philosopher Peter Singer wrote the most important article I've ever read. It was called " What Should a Billionaire Give — and What Should You ?".

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High Frequency Trading: Threat or Menace?

Harvard Business Review

While the rest of the stock market world was still operating in terms of minutes and seconds, the HFTers (led by two Chicago-based firms, hedge-fund giant Citadel and upstart GETCO, now called KCG ) found a whole new world of profit in the milliseconds and microseconds between when orders were placed and filled. Ethics Finance Technology

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7 Skills That Aren’t About to Be Automated

Harvard Business

For example, if you are suggesting cost reduction and balance sheet restructuring to GE, where activist investor Nelson Peltz, one of the founders of hedge fund Trian Fund Management, has a major stake, your pitch has a very different meaning than it would at News Corporation, where Rupert Murdoch still has effective control of the company. An ethical compass. John Fedele/Getty Images.

Pushing Employees to Go the Extra Mile Can Be Counterproductive

Harvard Business

To find out, we designed a pair of studies that would measure the ethical repercussions of externally motivated organizational citizenship. Good acts build up credits which act as a hedge against the debits of future bad acts. Convincing employees to go above and beyond the call of duty may be the epitome of personnel management. We all want our employees to be engaged and motivated. Of course, that’s easier said than done.

Monitor, Libya, and the Perils of a Blurred-Line World

Harvard Business Review

But businesses and professions that have been around for years tend to develop codes or ethics or at least norms of acceptable behavior. hedge funds? Disruptive innovation Ethics Public relationsThe headline in the Guardian last week read: The Monitor Group: Gaddafi's PR firm used academics. I think it's safe to say that the Monitor Group would prefer not to be known as "Gaddafi's PR firm." (And And not just because, at Monitor, they appear to prefer the spelling "Qhadafi.")

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The Tempting of Rajat Gupta

Harvard Business Review

They paid their executives accordingly, as did the banks, brokerage houses, hedge funds, and private-equity outfits whose share of U.S Consulting Ethics Organizational cultureAs anyone with the slightest interest in the consulting business knows by now, the SEC has brought civil charges against Rajat Gupta in the Galleon insider-trading case.

Why Companies Are Becoming B Corporations

Harvard Business

For instance, a study by Kellogg Professor Ned Smith reveals how a clear “nonconforming” identity among hedge funds beneficially influences investors’ capital allocation decisions—investors rewarded nonconforming funds (defined as hedge funds with atypical trading strategies, relative to the norm, for their overall fund style classification) with greater investment after short-term success and penalized them less after poor performance.

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Three Strategies for Long-Term Value

Harvard Business Review

This narrow focus on raising stock price by any means possible keeps companies from making long-term investments, protecting the interests of essential stakeholders like employees or customers, or taking much account of social welfare and ethical considerations in making business decisions. At least one powerful type of shareholder is not diversified, doesn't seem to care about ethics or social responsibility, and prefers to hold shares for at most two or three years.

Robo-Advisers Are Coming to Consulting and Corporate Strategy

Harvard Business

These robo-advisors may be used to automate certain aspects of risk management and provide decisions that are ethical and compliant with regulation. Human advisors could also, like hedge fund managers, analyze the results from machine-advised decisions and advise clients on whether changes are necessary in the algorithms and logic employed by the machines. CSA Images/Printstock Collection/Getty Images. Does a robot manage your money? For many of us, the answer is yes.

Morning Advantage: Inside Tim Cook's Apple

Harvard Business Review

And it's become more ethical, even as profits have risen, with Cook donating company money to charitable causes for the first time, instituting fair labor checks at the FoxConn plant in China, and issuing a public apology to disappointed Apple Maps customers. Everywhere around him, he sees hedge funders and investment advisors who insist, contrary to all appearances, that the US will avoid a fiscal cliff because to do otherwise would be "embarrassing."

Reimagining Capitalism

Harvard Business Review

Capitalism degenerates into narrow self-interest without a strong ethical foundation. How do we measure the ethical or moral climate of a company, and what is the dashboard? What kind of a forum or process could we create that would allow individuals to freely share and discuss ethical dilemmas? What does it mean to articulate and instill a vision compelling enough to inspire sacrifice, stimulate innovation, and hedge against expediency?

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Loose Ties Are Abundant, but Risky, at the Top

Harvard Business Review

When pressed, Owens tried to hedge his answer, but the media portrayed him as calling the President a liar. As Max Weber might have put it , the President was motivated by an ethic of conviction , doing everything possible to achieve his end goal, which was getting the bill passed. Owens, however, operated out of an ethic of responsibility – the ends were not enough to justify misleading his workers or the press.

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“Trust Me, I’m a Leader”: Why Building a Culture of Trust Will Boost Employee Performance – and Maybe Even Save Your Company

Strategy Driven

And that response is hidden inside ‘business’ behaviors – sandbagging quotas, hedging on stretch goals, and avoiding accountability or commitment. That’s when the usual ethical and moral constraints are sometimes abandoned – always for good reasons, and always ‘just this once’ – in the name of expediency. Do your employees trust you? The brutal truth is probably not.

“Trust Me, I’m a Leader”: Why Building a Culture of Trust Will Boost Employee Performance – and Maybe Even Save Your Company

Strategy Driven

And that response is hidden inside ‘business’ behaviors – sandbagging quotas, hedging on stretch goals, and avoiding accountability or commitment. That’s when the usual ethical and moral constraints are sometimes abandoned – always for good reasons, and always ‘just this once’ – in the name of expediency. Do your employees trust you? The brutal truth is probably not.

Why Private Equity Still Makes Us a Little Queasy

Harvard Business Review

This is a neighborhood shared with hedge-fund managers and investment bankers, not the types most of us think of as "running a business," Romney's self-described leading credential for higher office. Ethics Government PoliticsWhatever its other educational benefits, the race for the Republican presidential nomination has served to introduce legions of hitherto oblivious Americans to the joys and sorrows of private equity.

The Hidden Danger of Being Risk-Averse

Harvard Business Review

Further research conducted by Harvard''s Francesca Gino and Joshua Margolis, indicates that prevention-focused people are more likely than the promotion-focused to behave ethically and honestly — not because they are more ethical per se, but because they fear that rule-breaking will land them in hot water. Incidentally, Iksil was head of the Chief Investment Office, the purpose of which is to protect the bank by hedging some of its other riskier bets.

When Success is Born Out of Serendipity

Harvard Business Review

What, they asked her, was the most powerful argument for promoting diversity — outside of ethical and legal ones? And in 2004 Paolo Pellegrini, a VP at the investment bank Lazard Freres, was fired — then took on a low-level position at a hedge fund after a lucky phone call. Eight years ago I published a book, The Medici Effect , that examines how and why groundbreaking ideas occur at the intersection of different cultures, industries, and disciplines.

Calculating the Market Value of Leadership

Harvard Business Review

intellectual, emotional, social, physical, and ethical behaviors)? Equity investors (venture capitalists, private equity, portfolio managers, mutual/hedge fund managers) will use this index to complement existing financial and intangible analysis and gain a more thorough and rigorous understanding of firm’s full market value. In recent years, investors have learned that defining the market value of a firm cannot just be based on finances.

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