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Description: It isn’t often that big blue gets a black eye. But on Friday IBM (IBM.N), the leading U.S. technology firm known for its conservative management, found itself entangled in the largest ever hedge fund insider-trading scheme involving Galleon Group founder Raj Rajaratnam.

Source: Reuters.com

Date: 10/16/2009

Keys: Capital budgeting decisons (p311), Stock market (p281)

Link: http://www.reuters.com/article/technologySector/idUSN1642835520091016

Questions for discussion:

  • How do you think this scandal might affect these firms’s stock value in the near and long term? Explain your answer.
  • Do you expect this to affect capital budgeting decisions by current or potential customers? Explain your answer.

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