Introduction
I chose to do this experiential activity on one of my favorite movies, Wall Street: Money
Never Sleeps. This is the sequel to the original Wall Street movie made in 1987, where Gordon
Gekko’s and Bud Fox’s greed send them straight to prison. Gordon Gekko was a big time trader
who traded primarily on inside information until he was caught and sent to jail. The sequel, just
like the original, focuses on the greed of stage 2 driven people in relationship to Wall Street, but
there are many other business ethics issues involved in the movie. Gordon Gekko’s daughter and
her boyfriend, Jake Moore, get involved in the new plot. When family and love get involved with
greed it only further complicates things, and this is illustrated in the movie. Jake Moore is
accused of being an idealistic stock broker by many of his coworkers and friends, many of which
are stage two thinkers, as defined by Kohlberg. One of the greediest people in this movie is
Bretton James. Bretton is the head of a large competitor named Churchill Schwartz.
Portrayal of the Business World
The business world portrayed in this movie is very greedy, competitive, and fast paced.
Overall, this puts the Wall Street line of business in a negative light. After watching the movie, I
can see why someone would think negatively toward Wall Street. One good example is the
presentation of Jake Moore’s bonus check. He is relatively young in this movie, and his bonus
check was over a million dollars. Many people view a young person receiving that much money
as nothing but bad news—often thinking that no one should be getting a check that large. Finally,
an innocent movie watcher would see that he is making his money by investing someone else’s
money. This is a contentious issue in today’s world. Bretton James, says, “You don’t need inside
information anymore to make money, all you need to do is stay out of jail.” This quote suggests
that making money in the stock market is easy. He suggests to the person whom he was speaking
to, Gordon Gekko, that jail should have been avoided in order to continue to gain immense
wealth. We all know that making money in the stock market is not that easy; if it was, everyone
would be doing it for a living. By the end of the movie you learn that Bretton James actually
made his money through illegal means and is placed under investigation. As for the competitive
and fast paced side of the business the movie demonstrates employees working around the clock,
maximally stressed, and clawing for promotions. Jake Moore is constantly battling for money
from investors, key information, and respect from his peers. In a scene early in the movie, Jake
and a fellow analyst go head to head for the investment idea of the day. They bring up each
other’s past failures and shortcomings in the process to try and gain any advantage. Jake’s boss,
in a different scene, becomes so upset that his company is failing that he commits suicide by
jumping in front of a train! I’m sure that it does not get more intense than that.
Business Ethic Dilemmas
False rumors were deliberately spread several times in this movie to influence trades in
the market. Early in the movie, Jake Moore spreads a rumor about a competing firm losing
money in an oil company, due to nationalization of oil fields. The reason he spreads the rumor is
because he believes the CEO of this company spread false accusations about Jake’s company
ultimately killing the company and the CEO, revenge! Jake ends up costing his competitor
$127,000,000 or 8% of their total stock price. Was this illegal? In many ways, yes; however, it is
not easy to prove that someone spread a rumor unless you have hard evidence, and this is the
main reason many people continue to do this in the business world. Little evidence was presented
in this case, and more importantly, Jake Moore did not make any money by spreading the rumor.
It only made it harder for a court to find a motive. His competitor, Bretton James, finds out that
Jake started the rumors and invites him over to discuss the issue. Bretton says that the money is
not actually what matters and that he wants to hire Jake to work for him because he is impressed
in his guts. Jake agrees so that he can secretly do further damage to the company. By the end of
the movie, Jake Moore discovers enough about Bretton to ruin his career and place him under
investigation by exposing a news story about Bretton. If I were Bretton, I would not have hired
Jake knowing what measures he was willing to go to in order to harm the company. I would have
handed Jake over to the officials, even if there was a slim chance that Jake could have been
charged with anything. At least by doing this, you would make an example out of Jake. Jake did
have a good reason for spreading this rumor, but I don’t think people should ever have to lie in
order to make a point to the public. I think there needs to be more strict guidelines with respect to
lying in the business world. I realize how hard this may be to enforce, but at least with something
in place people would consider the penalties they face.
The second ethical dilemma I chose to examine was choice of money over family.
Gordon Gekko was sent to jail in the original Wall Street movie and returned back to society
without the support of any of his family in the new movie. No one was waiting for him on the
other side of the fence when he was released because he put money above his family. Not only
does he put money above his family but also above any friendship he had. It is apparent that he
measured every relationship he had by the amount of money it generated for him. Even with all
of the stock talk in the movie the mention of family and what is important is an underlying
theme. Jake Moore makes contact with Gordon Gekko, so that his girlfriend, Winnie Gekko, can
piece her childhood memories back together. Jake makes it clear that he is only in contact with
Gordon for this reason and Gordon plays along. Later in the movie, it is revealed that Winnie
holds a large amount of Gordon’s wealth, which he gave to her before he went to jail. Gordon
says that Winnie agreed to give it back to him once he got out of prison but she reneged on the
agreement while he was in jail. This was the moment when it made sense to me why Gordon was
so interested in reconnecting with his daughter. By the end of the movie, Gordon convinces Jake
and Winnie to give Gordon the money so he can launder it into the states where he will give it
back to them. When Gordon receives control of the money he does not do this and saves the
money for himself to open up his own investment firm. In a last ditch effort, Jake attempts to
sway Gordon by showing him an image of his unborn grandson. This gesture finally sways
Gordon, and he agrees to send the money. This issue should have never existed. Gordon should
have realized when he went to prison that money is not the most important thing, and that he
should have found any good that was left in his life. Money is what got him in prison in the first
place, after all. I would have put the events that got me in jail in the past and moved on with my
life. I would have tried to do something good with my life so that I could say that I turned my life
around and made the best out of the situation.
The third ethical issue I would like to examine in this movie is the decision by the
Federal Reserve not to bail out the company, Keller Zable. This was the company that Jake
Moore and his boss who committed suicide worked for. In the movie the Fed argued that the firm
was much too leveraged and reckless. The company should have known better than to extend
itself as it did. To put it simply, the firm made far more bets on the market than it could cover.
Upon rumors that surfaced (rumors that Bretton James started) revealing the company’s balance
sheet, the market disapproved and began dumping company shares. Louis Zabel, Jake’s boss,
made the argument that every other investment bank had the same market exposure that his firm
had, and that if the Fed refused to save his firm, they would have to do the same with every other
bank. This argument was exactly correct and was based off what happened in the financial crisis.
The Fed decided to save a few of the first firms that failed just as the market expected, and when
it didn’t save another bank that failed, the market panicked. The market didn’t know what would
happen to the rest of the financial institutions. In the end, the Fed wrote the rest of the banks
larger checks than anyone could wrap his or her mind around. If the Fed didn’t provide them
with support, the result would have been a financial depression of unheard of proportions and
possibly would have propagated a global meltdown. The amount that the Fed gave to the banks
was too much, but they had to give it to them. The banks should not have ever been in this
position in the first place. Regulations were unwound to the point where investment banks were
back to the time before the great depression. They didn’t have to answer to anyone and could
invest in whatever they wanted. Hindsight is twenty twenty and if it were up to me I would like
to say that I would never let it get so out of hand, but the fact is that I am human, too. If I had
Allen Greenspan telling me what to do at that time, I would probably have listened just like
everyone else. If I was in the Fed’s seat after the crises, I would have written a smaller check,
with a pay-back promise.
Other issues that I had considered writing on were; moral hazard, insider trading, and
leverage. I still don’t fully understand moral hazard, but from what I can gather, it is the
tendency for a company or an individual to take on more risk because they will not feel the costs.
This phrase was mentioned more than a few times when the characters were discussing the banks
being bailed out by the Fed. This phrase, if I am not mistaken, underlines the entire argument.
Why would the banks not take on more risk if the Fed would bail them out in the end anyways?
Insider trading was covered very thoroughly in the first movie so I did not want to cover it in this
movie review. Insider trading is not a thing of the past, and it will continue to happen as long as
greed is ingrained in the human brain. One of the largest cases of insider trading was cracked just
last October. Raj Rajaratnam’s trades on insider information resulted in $74 million profits.
Finally, leverage is a very sensitive argument in the current market. Leverage says that I can be
exposed to a million dollars of market exposure by putting as little as twenty thousand dollars
down. Even though the investor can only lose the money that the person or company has in the
bet, it has placed many financial institutions and people in terrible situations. It has forced many
overly confident investors to put all of their investments in one basket.
What I Learned
I learned a lot through doing this exercise. I learned that business situations can spin out
of control in no time at all. You have to be constantly reevaluating why you are doing the things
that you are doing and why you are putting yourself in certain positions. Many Wall Street
investors become much too greedy and let money take over their lives. I learned that there are
many things much more important than money in life, and that you must keep your family close
to your heart because no matter what happens they will be all you have left in the end. I also
learned that as much as we want to blame someone for our problems, we are often times just as
much to blame.