Lack of Business Ethics and Finance Essay

The Citigroup Inc. also known as Citi is a foremast financing company based in America with its headquarter in New York. According to www.money.cnn.com (2008) fortune list, the Citigroup listed 8th in the top 500 business organizations in the world. The group came into existence by one of the world’s biggest mergers between Citicorp and multinational financing company, Travelers Group in 1998.Presently the company has the biggest monetary services in the world, covering 140 countries with almost 16000 offices and 260000 employees to serve more than 200 million customers.

The company is headed by Richard D. Parsons as the chairman and Vikram Pandit as the CEO which deals in Consumer banking, corporate banking, Investment banking, Global wealth management, financial analysis and Private equity. In recent times the company has faced severe criticism for unethical behavior, false marketing and bad financial management. The company is accused and also found guilty in various unfair practices such as unofficial lending of financial support, unfair interests on investments and unethical behavior towards customers. This report will analyze the business techniques taken by the company which were proven not to be correct and also propose the righteous essential components. 3. Organisation Background It began in 1812 with City Bank at New York which was chartered by the New York state and soon became the largest bank in America. In the year 1913 it became a pioneer by serving as a provider to Federal Reserve Bank of New York. Then came a major breakthrough, in the year 1918 the acquisition of International Banking Corporation not only made Citi as the first bank to possess more than $ 1billion asset but also made it the world’s biggest commercial bank, since then there was no looking back. The Citigroup further divided into four vital subcategories; Consumer Banking Global Wealth Management Global Cards Institutional Client Group Citigroup is also known for its government interactions and public relations, as reported by the Center for Responsive Politics the company is claimed to hold 16th place in contributors for political campaigning in the United States of America, statistically they have contributed $23,033,490 from 1989 to 2006. 4. Rationale In the proposed topic, the analysis of vital aspects which are considered as the main reasons due to which the company had to suffer losses. We shall also consider the factors such as diverse requirements in different countries and also complexity in implementation. Due to vastness of the group and several unethical decisions the company had to go through severe downfall.

The research will also closely investigate the causes of the wrong decisions and what should have been instead. Through a detailed study done, it helps drawing conclusions and propose methods and strategies which will help getting desired outcomes and improve the working of the company. Evaluation is necessary for analyzing the decisions which not fruitful and also helps in deciding the correct strategies for bright prospects. 5. Literature Review The prime focus of this section is to provide reviews of the researches done in the past related to the topic under consideration. A brief evaluation of the literature on unethical business done and the subsequent measures taken is been discussed by researchers and practitioners in recent years. Among many other problems faced by the company over recent years As observed by Fein.M (2008) the NASD had fined Citigroup Global Market, Inc. for $250,000 and also admonished them for improper advertising of the sales documents in connection with hedge fund in the year 2004. The NASD suspected that the group had distributed sales document mentioning the fixed percentage of return with no evaluation of the target, the firm had also displayed fictitious returns in documents and had also included inadequate risk factors.

Also according to his research Citigroup and another bank were taxed $5 million per head for violating a rule with regards of corporate high yield bonds. The NASD assumed that these companies were keeping illegitimate records and did not apply necessary managerial actions when required. Choir (2009), confirms through the researches that the foremost reason for mass losses to broker dealer banks is the percentage of sublime mortgage crisis was high and posed a threat to not only weak U.S but also international financial system. On the contrary there were some investment bank that were flourishing and made massive profits by taking a stand against the dropping rate in the housing finance market. According to an article published in The New York Times by Dash (2008), the Citigroup will have to hold their extra payments for coming three years and will also comply with the restrictions due to some administrative reimbursement, this was in accordance with a rescue accord with federal regulators. On this, the president of The United States Of America George.W.Bush said that, the people of America should be aware that there is a secure teamwork and the required will be taken as they always have in the past. The composite rescue arrangement had made the government not only to fund $20 billion to Citigroup, but also $306 billion indirectly for credits and insurance.

These compensations and rescued the government and the Citigroup from a multimillion-dollar crisis. According to Beltran(2002), the top companies on the Wall Street have agreed to for a settlement of $1.43 billion and revise business for real estate and compensate their investors who were mislead with partial data. Citigroup was taxed with $400 million as a compensation for fraud with the investors, this also led to a split between the states and the federal government. After a detailed study and analysis the settlement was done by stating that bank’s research will be separate from the investment and also the forbidden from allotment of IPO shares . https://www.variety.com/article/VR1118012681.html?categoryId=1444&cs=1&nid=4758 for literature review 5. Research Objective The primary objective of conducting this analysis is to study the reasons behind the downfall of the company, what decisions that were taken which caused the firm to collapse which subsequently harmed the world’s economy, a detailed investigation proves that the decisions were unethical and the company was guilty as charged and had been penalized monetarily which as a result the company to finally file bankruptcy. This research is a lesson to be taken on every aspect that unethical and deceptive business methods are always catastrophic in long run and are harmful. 6. Research Questions The foremost questions that arises after this analysis; is the customer lost trust in the multinational banking services and has the customer started to make more research before investing its money. More over there are following questions that go through a potential customers mind before investing its assets: What could be the possible threats to an investor’s assets ? Has the customer become more alert when it comes investments ? 7. Methodology This research had a requirement of investigative perspective so Exploratory method of research is used, the proposed research is about the unethical behavior and false business and marketing strategies by Citigoup, the data had to be collected from various news papers, online business experts, wallstreet journals and company websites, as explained by Huber(1985) and Sibson(1987), Exploratory method is a numerical method which works on simple statistics as one dimensional data. Also confirmed by Schaffer and Riordan(2003) as to how to analyze an organization, how to work on the problems and finally how to develop a methodology. It begins with analyzing the problem or the proposed topic, then, gathering all the possible data relating to the subject from various sources, then arranging the gathered data in accordance to the proposed topic after that, validating all the accumulated information, and finally eliminating the data which is irrelevant . 6. A. Population of the Study ???????????????????????? 6. B. Source of Data There were two types of data that were researched, primary data and secondary data : Primary Data: In the process of primary data collection the information is collected by interviews and obtaining feedback through questionnaires.

The collection of data directly from realistic fields is called primary data. Some of the methods that are used to gather primary data are: Open-ended and Close-ended questionnaire technique. Face to face conversation with the customers. Reviewing and discussion with officials of the bank. Observation method, reviewing case studies and research papers about the bank. Secondary Data: The secondary data is the information already collected by other people for different research purposes. The views about different perspective which are provided over the internet or through business journals and magazines can also be taken into consideration. Some of the ways of gathering secondary sources of information are: Viewing the annual reports of recent years of the bank. The various article published such as wall the street journal, CNN review. Information over the internet. Newsletters of Citigroup. Articles from newspapers. 7. Data Analysis After gathering all the data possible a scrutiny is done on both the qualitative as well as the quantitative data.

The qualitative is represented in terms of appropriate bar charts, graphs and diagrams. Also the proper referencing so as where the data is taken from should be done. As far as the quantitative data is concerned ‘data display and analysis’ which is subcategorized as, reduction of the data firstly, second is display of the data in proper graphical or pictorial whichever is required and finally concluding the data and verifying the data. Data reduction is briefly summarizing the data and concentrating on the important parts. Reducing is deleting the data which is out of context. Huberman(1994). 8. Resource Requirement Internet facilities had a major share in the form of published articles from annual reports in The New York Times, The CNN and also from online Wall Street journals. A detailed reports from the press reporters and also books published about business by business gurus.

The library also has a vital role for supplying literature.

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