Hedge Fund Edge Case Study

Kara Tan Bhala ()
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Kara Tan Bhala: Seven Pillars Institute for Global Finance and Ethics

Chapter Chapter 6 in Ethics in Finance, 2021, pp 57-69 from Springer

Abstract: Abstract The story in this chapter recounts the pressure hedge managers experience to exceed performance metrics using extraordinary means, in particular, insider trading. The case explains the work of hedge funds and the characteristics that make them distinctive from other asset managers. The ethics section discusses what actually constitutes insider trading and examines why the practice is not only illegal but also unethical. Issues of fairness and fiduciary duty are applicable. Further, a utilitarian analysis using behavioral finance assessments of insider trading throw doubt on whether benefits outweigh costs of this insider trading.

Keywords: Hedge fund; Insider trading; Insider information; Lori Loughlin; US vs. O’Hagan; Behavioral economics; Ultimatum game; GameStop (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-73754-2_6

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DOI: 10.1007/978-3-030-73754-2_6

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