Lecture 1

Question 1

Ethics

Answer 1

Ethics are moral principles that govern a person’s behavior or their conduct

Question 2

Inappropriate Behavior

Answer 2

Behavior that is not in keeping with the occasion, the time, or the place (not necessarily unethical, not illegal)

Question 3

Illegal Behavior

Answer 3

Behavior or acts that contravene the laws of the jurisdiction in which the person acts (may or may not be unethical)

Question 4

Immoral Behavior

Answer 4

Behavior that contravenes someone’s or some groups established and accepted practices or rules (not necessarily unethical and not necessarily illegal)

Question 5

Unethical Behavior

Answer 5

Behavior that does not conform to acceptable standards of behavior in society or in a profession (not necessarily illegal)

Question 6

Behavior is ______. It is _________

Answer 6

Chosen & Deliberate

Question 7

Business Ethics

Answer 7

Implementation and control of appropriate business policies with regard to a company’s governance

Question 8

How many government organizations regulate the financial services industry in Canada?

Answer 8

24+

Question 9

Canada has no federal securities commission, each province has its own. True or False?

Answer 9

True

Question 10

What is OSFI

Answer 10

Office of the Superintendent of Financial Institutions

Question 11

What does OSFI do?

Answer 11

Regulates insurance companies, trust & loan companies

Question 12

What is the CSA?

Answer 12

Canadian Securities Administrators

Question 13

What does CSA do?

Answer 13

Regulates dealers, portfolio managers, and fund companies

Question 14

CSA Mission?

Answer 14

Protect investors from unfair, improper or fraudulent practices

Question 15

What is SRO?

Answer 15

Self Regulatory Organizations

Question 16

Moral Hazard

Answer 16

Parties do not fully bear the costs of their risk-taking behavior

Question 17

Intermediaries

Answer 17

Firms or individuals that act to bring other parties in a investment transactions

Question 18

Securities Exchange Acts of 1933 and 1934

Answer 18

Established the SEC, market regulations, audited financial statements

Question 19

Investor Advisors Acts and Investment Company Act of 1940

Answer 19

Individuals/Firms who seek compensation for advice and manage $25m+ are required to register with the SEC

Question 20

Rule 10b-5

Answer 20

Preventing manipulation of markets

Question 21

Sarbanes-Oxley Act of 2002 (SOX) / Public Company Accounting Reform and Investor Protection Act of 2002

Answer 21

Designed to enforce greater accountability for corporate executives to increase disclosure and eliminate conflicts of interests

Question 22

Public Company Accounting Oversight Board (PCAOB)

Answer 22

A governmental body established by SOX to enforce new audit laws

Question 23

Fiduciary Duty

Answer 23

Duty when placed in a position of trust

Question 24

4 Fundamental Principles of Investment Ethics

Answer 24

1. Ethical Understanding
2. Ethical Use of Information
3. Responsible Investing
4. Trust and Fairness