Lecture 1 Flashcards
Ethics
Ethics are moral principles that govern a person’s behavior or their conduct
Inappropriate Behavior
Behavior that is not in keeping with the occasion, the time, or the place (not necessarily unethical, not illegal)
Illegal Behavior
Behavior or acts that contravene the laws of the jurisdiction in which the person acts (may or may not be unethical)
Immoral Behavior
Behavior that contravenes someone’s or some groups established and accepted practices or rules (not necessarily unethical and not necessarily illegal)
Unethical Behavior
Behavior that does not conform to acceptable standards of behavior in society or in a profession (not necessarily illegal)
Behavior is ______. It is _________
Chosen & Deliberate
Business Ethics
Implementation and control of appropriate business policies with regard to a company’s governance
How many government organizations regulate the financial services industry in Canada?
24+
Canada has no federal securities commission, each province has its own. True or False?
True
What is OSFI
Office of the Superintendent of Financial Institutions
What does OSFI do?
Regulates insurance companies, trust & loan companies
What is the CSA?
Canadian Securities Administrators
What does CSA do?
Regulates dealers, portfolio managers, and fund companies
CSA Mission?
Protect investors from unfair, improper or fraudulent practices
What is SRO?
Self-Regulatory Organizations
Intermediaries
Firms or individuals that act to bring other parties in a investment transactions
Securities Exchange Acts of 1933 and 1934
Established the SEC, market regulations, audited financial statements
Investor Advisors Acts and Investment Company Act of 1940
Individuals/Firms who seek compensation for advice and manage $25m+ are required to register with the SEC
Rule 10b-5
Preventing manipulation of markets
Sarbanes-Oxley Act of 2002 (SOX) / Public Company Accounting Reform and Investor Protection Act of 2002
Designed to enforce accountability for executives to increase disclosure and eliminate conflicts of interests
Public Company Accounting Oversight Board (PCAOB)
A governmental body established by SOX to enforce new audit laws
Fiduciary Duty
Duty when placed in a position of trust
4 Fundamental Principles of Investment Ethics
Ethical Understanding
Ethical Use of Information
Responsible Investing
Trust and Fairness
Moral Hazard
Parties do not fully bear the costs of their risk-taking behavior
