Something for Nothing

Something for Nothing

Arbitrage and Ethics on Wall Street

Book - 2016
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WW Norton
In 2001, Goldman Sachs structured a complex financial contract so that its client, the government of Greece, would appear to have far less debt than it actually did. When news of this transaction came out years later, the inevitable question arose: Even though Goldman’s actions were legal, were they ethically wrong? Is modern finance itself inherently unethical?In Something for Nothing, financial economist Maureen O’Hara explains that one of the key innovations of modern finance is its reliance on arbitrage, the practice of taking advantage of a price difference between two or more markets to generate profits and remove inefficiencies. When done correctly, arbitrage can create value at little or no cost (in effect, getting “something for nothing”); but it can also be an exploitative tool.In a lucid, insightful discussion of the ethics of arbitrage in modern finance, O’Hara reveals how the rules can often be stretched into still-legal yet highly unethical business practices. Examining key cases in clear and persuasive prose, O’Hara illuminates various aspects of financial ethics, from the Goldman Greek transaction to Lehman Brothers’ attempt to cover up its debt, JPMorgan Chase’s maneuvers in California’s energy markets, Bernie Madoff’s trading strategies in the 1980s, high-frequency trading practices, and toxic loans in France.Ultimately, O’Hara turns to philosophy and religion to argue for a new, humanistic approach to ethics in the financial industry. She makes a strong case for a way forward: fewer rules and more standards to foster a morally responsible outlook. Fearlessly raising the questions at the moral heart of our financial system, Something for Nothing is a masterful treatise on the ethics of modern finance.
From a leading financial economist, a searching examination of the ethics of modern finance.

Baker & Taylor
A leading economist, exploring the murky moral universe of modern finance and its foundational techniqueùarbitrageùexamines key cases, including the Lehman BrothersÆ collapse and the energy market manipulation in California, and reveals the ways arbitrage can transgress ethical lines.

Book News
The author examines the ethics of arbitrage in modern finance, showing how the rules can be stretched in a legal yet unethical way. She discusses why some arbitrage-based activities cross the line to being unethical, while showing why modern finance can be used to make society better and why some strategies can have the opposite effect if misused. She outlines some general ethical frameworks for recognizing ethical boundaries and examines recent financial scandals to illustrate when these lines were crossed. She explains the role of cash flows in finance, what arbitrage means, and how removing inefficiencies can make markets better-off; examples of how this cash flow approach works in mortgage-backed securities, structured loans, and synthetic corporate bonds; approaches to ethical behavior in markets; ethics in action; examples of deception and regulatory arbitrage in Lehman Brothers Repo 105, the flawed mortgage-back securities issued by Bank of America and its subsidiaries Countrywide Financial and Merrill Lynch, the Goldman Sachs Abacus deal, Bernie Madoff and the Cincinnati Stock Exchange, JPMorgan Chase and the California energy markets, and Goldman Sachs and the aluminum market; issues related to statistical arbitrage and high-frequency trading; the incentives of borrowers and lenders; and the challenge of arbitrage and ethics for market participants, including the role of behavioral biases, culture, and the ethical limits of arbitrage. Annotation ©2017 Ringgold, Inc., Portland, OR (protoview.com)

Baker
& Taylor

Explores the murky morality of modern finance and its foundational technique, arbitrage, examining such key cases as the Lehman Brothers' collapse and the energy market manipulation in California.

Publisher: New York : W.W. Norton & Company, [2016]
Edition: First edition
ISBN: 9780393285512
0393285510
Branch Call Number: 174.4 Oh17s 2016
Characteristics: x, 223 pages : illustrations ; 22 cm

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