American Superconductor Corporation recently sued its biggest customer, the largest manufacturer of wind turbines in China, Sinovel Wind Group Corporation. An American Superconductor employee stationed in Austria was reported to have sold software that controls wind turbines to Sinovel for 1 million U.S. dollars. The estimated cost of the company for the leak of this information is 70% of the overall profits for that year.
The term for this employee selling this information under the table is insider trading where the employee used the company for his own personal gains. This 38-year-old employee went against the company’s ethics code because it hurts the intentions that the company has put in place. American Superconductor’s business strategy was to be able to license its technology in the global market to Asia and the Middle East but now this global strategy is varnished with the current legal debate it is in. The ethics codes of moral integrity and honesty within the company were broken. In this case American Superconductor acted as its own whistleblower by conducting its own investigation in the Austrian plant after suspicions due to Sinoval’s with drawl of a $60 million order.
It is clear that American Superconductor has adopted a compliance-based ethics code within its company by attempting to penalize this employee. This is just one step it can take in order to increase the company’s sales that fell quickly due to this issue. Because of this legal issue within the company there were many affects it had on the success of the overall company and the industry as a whole. Not only now does this major energy company have to deal with this accusation, this problem came at the same time as other renewable energy companies are struggling to increase demand in the United States. The solar panel company Solyndra Inc. filed for bankruptcy after being investigated by the Federal Bureau of Investigation. In addition President Obama sought to increase manufacturing jobs in this industry, but as the information was leaked to Sinovel and their production and profits rose, energy companies in America are falling to overseas competition.
I always think its so interesting when "information" can be so profitable. The fact that that the company is spiraling downward because of that one secret sale is mind blowing. I also think this article displays another interesting point, which is, the entire corporation isn't necessarily "unethical" and that it can really just be one person who causes so much trouble. I'm curious about the inside trader because he or she must have realized the damage he/she would cause would be attract great attention....I wonder if the 1 million dollars was worth it.
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ReplyDeleteInsider trading has been part of the United States Marketing system since the late 1700's when William Deur used his post in the Treasury to guide his personal bond purchases. The scariest part of this technological age is while it has become easier to track communications, a greater number of people will never be caught insider trading. The SEC closely monitors any extreme cases of "prescient" selling of stocks but the information between companies has a frightening amount of power attached to it.
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