Followed or not, just about every large company and professional organization has a code of ethics that's meant to get everyone doing the right thing. The code might describe the company’s or organization’s values, how employees are supposed to behave and what to do when faced with particular ethical dilemmas. It could also spell out the penalties if the code of ethics is not followed.
Professions such as realtors, certified public accountants, Wall Street traders, bankers and financial advisors all have a code of ethics written by the trade organizations that issue their certifications. Rules for behavior are clearly defined and a person can lose their certification if the rules are broken.
Adam works for a large medical center doing fundraising. He can access patient data such as name, address and phone number, but the hospital’s code of ethics clearly states he is not allowed to look up data regarding the patient’s diagnosis, treatment, etc. The code also states the employee will be terminated if he or she is caught doing this. So, Adam resists the temptation to look up the records of his friends and relatives.
For some industries such as banking and investments, there are laws in place that guide their code of ethics and behavior. Since it’s crucial that these are followed, some companies hire a compliance officer to keep up to date on industry requirements, conduct training for all employees, and ensure rules are being followed.
A code of ethics can also contain a company’s commitment to preserving the environment or not doing business with foreign companies that use child labor or pay very low wages.
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Finance: What are Prudent Investor Rule ...8 Views
finance a la shmoop what are prudent invest our rule standards via know your
client rule and unsuitable recommendations well let's start with
the prudent investor rule standards their standards for what is rational [Man discussing prudent investor rules]
like those who can't afford to take a ton of risk think little old ladies who
are retired with just enough money to make it to you know the end well they [Old woman with pocket watch]
can't afford to take the risk of volatile equities like a small cap fund
that can whipsaw 30% up and 30% down in any given year no way not acceptable not
suitable not prudent or what about they're investing in a venture capital
fund or a private equity fund that takes seven years or more before it normally
even begins to distribute IPO sales or proceeds so no in seven years that [Woman counting cash]
little old lady is more likely doing the backstroke 24 by 7 yeah well
recommending venture capital investments to a little old lady who needs cash [Old lady and little pooch graves]
liquidity to make payments on her dentures is an unsuitable recommendation
you can't do that so what's prudent or suitable for her well bonds government
bonds shaken not stirred maybe a few corporate bonds and maybe a spicy 10 or [old lady's portfolio piechart appears]
maybe 20% of her portfolio allocated to equities with a lot of safe boring
dividend yield think companies like AT&T and GE and IBM oil companies a whole lot
of nice boring math on her way to the grave then what if the client is a [Insurance company man approaches girl with cheque]
parentless teenager who just inherited a million bucks from mom and dad courtesy
of the insurance company of the drunk driver who killed them both when they [Police sirens appear]
cross the double yellow line should that teen be in government bonds no that
would be unsuitable at least not all in government bonds in fact probably very
little in government bonds why well for that teen a heaping allocation to a
small calf equity fund is totally prudent appropriate and smart because [Equity fund growth graph appears]
that teen likely has decades maybe even half a century before she'll want to
call or use that money so time will bail her out of the year-to-year short-term
volatility because over time the market goes up and
usually a lot let's gaze for a moment on this beautiful S&P 500 stock chart for [Stock chart for S&P 500]
glassed-in and give her to take century kind of lovely well the basic idea for
this rule is that the financial advisor has to recommend investments that are [Financial advisor reading piece of paper]
prudent and appropriate given the client's age health financial needs
appetite for risk their own career strength likelihood of being abducted by
aliens etc and a time at which point they'll need to turn their investments [Alien spacecraft hangs over city]
into cash to pay for stuff well the good financial adviser knows her client and
there actually is a rule called the know your client rule but you can only know
them so well before you start you know crossing the lines [Man sleeping and woman lying awake in bed]
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