Law, Privacy And Digital Data
For apps to be featured on the iPhone, developers must build it with Apple's software development kit and then apply for approval. Apple rejected the Google Voice iPhone App, and further stated that it would not accept any applications that incorporated Google Voice functionality. Apple reasoned that this app duplicates the phone's core features. It also rejected Google's location-based app Google Latitude. If you were developing a collaborative platform, do you think the best model is this collaborative model, or is the open innovation model better – if your main goal is to maximize innovation? What if your main goal is to make money?
Plaintiffs filed a class action lawsuit against investment banks alleging that they inflated prices on more than 300 IPOs, causing IPO investors to overpay for stock, and unlawfully benefited these banks through overcompensation of banking commissions and profits made through quick sales of this stock in their own accounts before prices settled into a more realistic valuation. How would you combat such abuses going forward?
Sample Solution
Going forward, it is important to establish measures to prevent such abuses from occurring again. First and foremost, regulatory oversight needs to be enhanced in order to ensure that investment banks are not engaging in any practices that violate securities laws. This could include more frequent audits of companies participating in IPOs and greater enforcement of existing regulations.
In addition, investors need more access to information about the financial health of companies prior to investing in their IPOs. Increased transparency will enable investors make more informed decisions when selecting which stocks they wish invest in. Companies should also be required to disclose all relevant information prior to going public so that potential investors know exactly what they are getting into before investing their money.
Another way of preventing these abuses would be for investment banks to implement a system wherein profits earned through quick sales must be disclosed and/or reinvested into the stock on behalf of its customers or shareholders instead of being pocketed by the bank itself. Banks can also use algorithmic trading systems that determine a reasonable price for an IPO without relying heavily on speculation or insider knowledge. Finally, stricter sanctions should be imposed against those who engage in fraudulent activities related to IPOs as well as banks who fail comply with the rules outlined by regulatory bodies such as the Securities & Exchange Commission (SEC).
These steps will go a long way towards protecting investors from being taken advantage of while also incentivizing responsible behavior among investment banks throughout the IPO process.