“Organisations which are either under stress and/or have been forced into
administration have all shown poor risk management. But in addition their
ethical behaviour towards their clients has, in many cases, been poor, leading
to a loss of client confi dence and therefore business and revenues” Bob Parker
TOMLINSON – Th is is a diffi cult DIERMEIER – A lack of leadership and mind for investment professionals,
question because it implies that ethics governance in restraining what regulators, and fi rms across the globe.
alone could have prevented the crisis appeared to be profi table but inherently
developing. Undoubtedly, a stronger fl awed business activities, as well as a TOMLINSON – Besides a restructuring of
ethical culture would have helped disregard for investor protection at the fi nancial services industry, we are
some fi rms, e.g. thinking hard before many of the troubled fi rms, created a going to see much more regulation and
making a ‘ninja loan’ would have culture in which real estate speculation, supervision in future. Should regulation
benefi ted everyone. But the crisis we inappropriate mortgage lending, excess be ‘principles-based’ or ‘rules-based’?
are experiencing is a systemic crisis, i.e. leverage, and a lack of due diligence has My view is that rules-based regulation
it is the whole system which is at risk, led many fi rms to ruin. Th e explicit will always be circumvented. Much
not just individual fi rms. Ethics alone principle of the Asset Manager Code better to work with principles-based
is not the solution to systemic [Th e CFA Institute Asset Manager regulation – and to require the players
problems. But without ethics, the Code of Professional Conduct] is that to adhere to the spirit of regulation
problems are insoluble. clients’ interests come fi rst. through ethical conduct. Of course
Specifi cally, managers should always people have to be held to the required
act with independence and objectivity, standards through eff ective supervision.
CFA INSTITUTE CODE
act with skill, competence, and More broadly, the way in which
diligence, communicate with clients in enterprises are managed – corporate
High ethical standards are critical to
a timely and accurate manner, and governance – will be seen as a key
maintaining the public’s trust in global
uphold the rules governing capital ingredient in making sure we minimise
fi nancial markets and in the
markets. Had more of the fi rms that are the probabilities of similar crises
investment profession. The nearly
now struggling or collapsed embraced happening in future. And corporate
100,000 members of CFA Institute – of
these standards, the strong ethical governance is all about ethical standards
whom 85,000 across 134 countries culture such standards promote would of behaviour and judgement.
hold the respected CFA© designation certainly have helped them and, in
– adhere to the CFA Institute Code of turn, lessened the impact of their PARKER – Industry groups need to
Ethics and Standards of Professional collapse on the industry. promote the highest standards of ethical
Conduct (‘Code and Standards’). Self behaviour, and fi nancial industry chief
regulation and enforcement of these executives should constantly highlight to
fundamental professional standards What more needs to be done to bring
their teams the importance of this
has served as a model for measuring ethics to the front of the debate?
behaviour. Although regulators have
and promoting the ethics of
rules which indirectly promote good
investment professionals around the
DIERMEIER – You, as fi nancial behaviour, ethics is a subject which is
world. The CFA Institute Asset
professionals committed to upholding diffi cult to regulate. Industry certifi cates
Manager Code of Professional
ethics in the investment industry, send a and exams, such as the CFA, promote
Conduct is a fi rm-focused partner to
message with the work you do every day fi rst class ethics.
Cg
the Code and Standards that
that reaffi rms the value of sustaining
reinforces your ethical responsibilities
sound ethics in the profession. At CFA
as an individual with a call for ethical
Institute, we will continue to reinforce
behaviour to emanate from the
The views expressed in this panel belong
that message through education, codes
highest level of investment
to the individual participants only. They
and standards, letters and public
management fi rms as well.
may not necessarily refl ect the views of
commentary, and policy research. It is
their companies or organisations.
our mandate to keep ethics at front of
10
008-10 ethics_roundtable.indd 108-10 ethics_roundtable.indd 10 222/11/08 10:52:282/11/08 10:52:28
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