EMULEX AND MARK JAKOB: MARKET MANIPULATION WITH FALSE INFORMATION Harvard Case Solution & Analysis

EMulex and Mark Jakob: Market Manipulation With False Information Case Study Solution

DoesJakob’s age and Background in the investment play a role in his culpability?

Jakob’s age and Background on investment do not play any role in his culpability since Jakob was a 23-year-old student and his current job was that he worked part time on Internet Wire where he distributed press releases on the Internet which has no direct connection with investments.

What responsibility do you believe that the newswire services, Bloomberg and Dow Jones had in the scheme?

Jakob sent a fake email to the Internet Wire regarding Emulex that the company has been engaged in conducting illegal accounting practices and Emulex’s CEO was resigning for releasing this fake news to the public. Bloomberg and Dow Jones without investigating about the email reported that the information is valid. This caused the Emulex market share to decrease as its stock declined to $43 from $113 and an overall loss of $2.45 billion.Jakob quickly exploited the market by buying the shares at low prices and once the rumors had been dispelled, he sold the shares at thehigh price and earned $187,000.

What is the ethical difference between what Jakob did and posting opinions various stocks on blogs and internet chat rooms?

The ethical difference between what Jakob did and posting opinions about stocks on blogs and internet chat room is that Jakob made a fake email and posted it on internet wire which created a rumor and false impression regarding Emulex being involved in illegal accounting practices. The purpose of the fake rumor was to cause Emulex stock prices to decline temporarily and exploit the market to buy shares at thelow price and sell it at ahigh price. This was unethical and also deceptive act by Jakob. Whereas posting opinions about stocks on blogs and internet chat rooms is not unethical since the person is only sharing his own reviews according to his knowledge and experience. Opinions are neither facts nor rumors, they are simply a person’s own perspectives.

EMULEX AND MARK JAKOB MARKET MANIPULATION WITH FALSE INFORMATION Harvard Case Solution & Analysis

 

 

If the rumor had been ignored by the market, would this change your view of Jakob’s action?

If the rumor had been ignored by the market, there would be no deep impact on the market and the investors of Emulex and the price of its stock would not be affected. However,Jakob’s action would still be considered as unethical since his purpose was to manipulate the market through hurting others and exploiting the market through buying at alow price and selling it on high...........................

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