PHIL 3310 Lecture Notes - Lecture 10: Espionage Act Of 1917, Trade Secret, Insider Trading
22 May 2018
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Chapter 10
Study Guide 10- (Moral Choices Facing Employees)
Obligations to the Firm include: Employees have an obligation to be loyal to their employees. Legal
obligation based on the law of agency. Employees are obliged to warn the organization of danger; act to protect
legitimate interests; cooperate actively to further corporate goals.
Argument against: loyalty depends on ties that demand self-sacrifice with no expectation of reward.
1. What is Loyalty?
a. Loyalty is a concept where employees willingly make sacrifices for the
organization above and beyond their job descriptions.
Avoiding conflicts of interest: Conflicts of interest are not always financial, when the private interests of
employees are enough to interfere with organization’s best interests—job duties. Employees should not subordinate
the welfare of the organization for their own gain.
2. How do Firms avoid conflict of interest?
a. People are encouraged simply to disclose the conflict to those relying on their
judgement, thus preventing deception and allowing those relying on them to
adjust interest.
Abuse of official position: Examples-Use of subordinates for non-organizational related work-
Insider trading-use of non-public information for one’s own benefit. Moral concerns arise for direct as well as
indirect injury. Pros and cons for harm caused by insider trading
3. What can be done to stop abuse of official position?
a. Insider trading is the buying or selling of stocks on the basis of nonpublic
information likely to affect stock prices. Insider trade seems unfair; it can
injure other investors and undermine public confidence in the stock market.
In practice, determining what counts as insider trading is not always easy,
but it typically involves misappropriating sensitive information. Determining
what insider trade is will help stop the abuse of official position.
Proprietary Data: (Distinguish between patents and trade secrets) Patents-well defined legally.
Trade secrets-vague, broad, and imprecise. (Arguments for protecting trade secrets) 1. Intellectual property of
company 2. Theft constitutes unfair competition 3. Violation of confidentiality agreement
4. What is a trade secret?
a. Trade secret is any formula, pattern, device, or compilation of information
which is used in one’s business and which gives him an opportunity to obtain
an advantage over competitors who do not know or use it.
5. Explain the intent of Economic Espionage Act of 1996.
a. The Economic Espionage Act of 1996 makes stealing trade secrets a federal
crime. Three arguments protect trade secrets: 1) Trade secrets are the
intellectual property of the company, 2) the theft of trade secrets is unfair
competition and 3) employees who disclose trade secrets violate the
confidentiality owed to their employers.
Bribes and Kickbacks: (Intent to induce to make a decision that would not otherwise be favorable)
6. What is a bribe?
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Document Summary
Obligations to the firm include: employees have an obligation to be loyal to their employees. Legal obligation based on the law of agency. Employees are obliged to warn the organization of danger; act to protect legitimate interests; cooperate actively to further corporate goals. Argument against: loyalty depends on ties that demand self-sacrifice with no expectation of reward: what is loyalty, loyalty is a concept where employees willingly make sacrifices for the organization above and beyond their job descriptions. Avoiding conflicts of interest: conflicts of interest are not always financial, when the private interests of employees are enough to interfere with organization"s best interests job duties. Abuse of official position: examples-use of subordinates for non-organizational related work- Insider trading-use of non-public information for one"s own benefit. Moral concerns arise for direct as well as indirect injury. Insider trade seems unfair; it can injure other investors and undermine public confidence in the stock market.
