Blue Bigger Case Study: Blue Star Shares

Decent Essays
18. – Blue Star shares start trading at $19,50 on the day that Bud wishes to manipulate it. Bud wishes to get raise the price in order to get Gekko to panic and try and sell all of his shares. Bud then wishes to drastically lower the price in order to get Wildman to purchase the shares and remove all ownership from Gekko’s possession.
– Bud manipulates the price upwards by instructing his colleagues at his stockbroking firm to get their clients to purchase Blue Star shares as it would be a good investment. The share price then begins skyrockets as the value of shares increase. This is due to the sudden increase in demand coupled with the reduction of the percentage of ownership of Blue Star available to the public. This is a false perception
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At $16,50, Gekko is reluctant to sell his share due to a major potential loss, however, Gekko convinces him that his investment cannot be saved, thus forcing him to sell his shares at a loss. Wildman then purchases Gekko’s shares, assuming full control over Blue Star airlines, whilst the share price steadily increases due to the increase in demand stimulated by Wildman’s purchases.
19. – Bud has access to confidential, non-public information. He has several ways to access the information. He states that he worked at Blue Star and knows his way around, thus becoming the President, he was able to access information that would help him determine the quality of investment.
– Bud has connections in Blue Star as well as trustworthy relations. Bud is able to obtain information that other investors do not have access to via his father and the three trade unions – mainly because they trust
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The latter essentially means that shareholders can hold the board of directors and management accountable for the performance of the business and decisions made. Upon dissatisfaction, the shareholders are able to exercise their power through voting at AGM’s. Major alterations within a publicly traded company must be voted on before changes can take place, thus limiting the extent to which contracts proposed by directors can impact the business and stakeholders. Shareholders are able to change management by dismissing and appointing new directors that may be more capable of running the organisation. Therefore, if directors underperform, they may be dismissed and new contracts must be evaluated and approved before being legally binding. Shareholders are also able to select an external auditor to ensure transparency. Directors may run the business but shareholders own it and possess all the power.
– Upon violation of their rights, shareholders can utilise their right to sue. This would be directed towards the company and is used as a remedy to alleviate corruption whilst ensuring that directors perform with the best interests of the business and stakeholders at large. Legal action may be taken in the form of a single shareholder complaint or a class action

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