Unethical Behavior in the Financial Markets
Reducing the Level of Unethical Behavior in the Financial Markets
By: LaDonna Malone
May 8, 2009
I. Introduction of how we will show how to reduce the unethical behavior
II. SEC Ethics
III. How our economy has affected ethics
IV. Does competition destroy ethical behavior?
V. Ethics in the financial and investment industry
VI. Have we turned a blind eye to unethical behavior?
VII. Does business ethic pay?
VIII. Conclusion
Investment fraud we hear about this constantly. 99 percent of the investment frauds we witnessed came from the Madoff scandal, Stanford Financial Group and others. We thought we had learned our lesson from Enron and Anderson & Anderson about five years ago but it has happened again. This has not only affected the little guy but also big investors that you would not even consider. Where have we gone wrong since it keeps happening over and over? First we are going to look how we can prevent this fraud. Next we will look how we can reduce the fraud. We also are looking how this all comes together and can affect our economy.
When selecting a financial advisor or firm makes sure a third party custodian is used. The investment advisor does not have custody of your assets which means they never directly handle a client’s checks, deposits or withdrawals.
The advisor would open there account at a reputable well know firm as the custodian. That person would have the authority to make investment decisions on your behalf within the parameters that have been set by you and your advisor, but the custodian would be the person who actually would have possession or custody of your assets.
There are four ways you can prevent investment fraud.
Reduced opportunity “Since the investment advisor does not have custody of your assets they never handle your checks, deposits and withdrawals directly. When the withdrawals are made they must go to one of your other accounts or sent by check to your address of
By: LaDonna Malone
May 8, 2009
I. Introduction of how we will show how to reduce the unethical behavior
II. SEC Ethics
III. How our economy has affected ethics
IV. Does competition destroy ethical behavior?
V. Ethics in the financial and investment industry
VI. Have we turned a blind eye to unethical behavior?
VII. Does business ethic pay?
VIII. Conclusion
Investment fraud we hear about this constantly. 99 percent of the investment frauds we witnessed came from the Madoff scandal, Stanford Financial Group and others. We thought we had learned our lesson from Enron and Anderson & Anderson about five years ago but it has happened again. This has not only affected the little guy but also big investors that you would not even consider. Where have we gone wrong since it keeps happening over and over? First we are going to look how we can prevent this fraud. Next we will look how we can reduce the fraud. We also are looking how this all comes together and can affect our economy.
When selecting a financial advisor or firm makes sure a third party custodian is used. The investment advisor does not have custody of your assets which means they never directly handle a client’s checks, deposits or withdrawals.
The advisor would open there account at a reputable well know firm as the custodian. That person would have the authority to make investment decisions on your behalf within the parameters that have been set by you and your advisor, but the custodian would be the person who actually would have possession or custody of your assets.
There are four ways you can prevent investment fraud.
Reduced opportunity “Since the investment advisor does not have custody of your assets they never handle your checks, deposits and withdrawals directly. When the withdrawals are made they must go to one of your other accounts or sent by check to your address of
References: Webley, Simon & More, Elise (April 2003). Does Business Ethics Pay? Website: http://www.ibe.org.uk/DBEPsumm.htm Oberlechner, Thomas (2007) The Research Foundation of CFA Institute Vishny, Robert W. (2003). Stock Market Driven Acquisitions, Journal of Financial Economics. Shleifer, Andrei (May 2004) Does Competition Destroy Ethical Behavior?