4. My presentation will be in four parts.

I’ve divided my talk into three parts.

In the first part I’ll talk about...

The second part is about...

ANSWERS

2. 1 She does all of these things.

2. (Box 1) Good morning, everybody. Thank you all for coming today.

(Box 2) My name is Paula Foley, and I'm Vice-President for Private Banking.

(Box 3] I'm going to talk about conservative portfolio strategies, because...

(Box 4) My presentation will take about fifteen minutes

(Box 5) I've divided it into four parts.

(Box 6] and as you can see...

(Box ?) If anything isn’t clear, or if you have any questions, please don’t hesitate to interrupt.

2. (Box 5) The first part..., The second part..., Then and finally...

Conservative portfolio strategies

•Risk management •Diversification •Indexed funds

• Capital preservation and accumulation

Practice

See page 136 of the Student’s Book for the file cards.

There are three role cards with different presentation subjects for this activity. Help learners to choose a subject which is useful or interesting for them. The content of the talk being introduced here is not really important: the speaker only needs to mention the three or four parts of the talk that will be developed later.

This exercise is about practising the elements of an introduction outlined in the previous exercises.

The learners could prepare this introduction out of class and present it in the following lesson - though with a large class, the learners are unlikely to want to hear and comment on more than three or four (very similar) introductions.

Ideally, the learners will be able to record their introductions, and listen to them afterwards.

The class can perhaps be invited to comment on the introductions, with reference to some of the following areas:

Did the speaker:

• include all the necessary parts?

• sound lively and enthusiastic?

• speak at the right speed?

• pause and hesitate (or say 'Eror 4Jm...’) too much?

• read too much?

• give the information clearly and simply?

• make eye contact with the audience?

• use appropriate gestures and body language?

It is probably a good idea to encourage the learners not to be too critical: presenting in public, especially in a foreign language, is difficult, and makes a lot of people very nervous.

Regulatingthe financial sector

T° learn about: financial regulation, managing conflicts of interest

To learn how to: use suffixes and prefixes

To practise: talking about conflicts of interest and ethical choices

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BACKGROUND: REGULATINGTHE FINANCIALSECTOR

Although, as discussed in Unit 1, the financial services industry was deregulated in the 1980s, a lot of regulations remain. Countries with a developed financial sector all have government agencies that regulate and supervise the industry, including the Financial Services Authority (FSA) in Britain, and the Federal Reserve (or the Fed) which supervises banks, and the Securities and Exchange Commission (SEC) which supervises corporations and the stock market, in the US.

There are regulations designed to prevent various practices that could lead to conflicts of interest

• situations where what is good for one department is not in the best interests of another department and its customers. Examples of these include the following:

• banks selling securities they have underwritten to their retail customers

• banks writing research reports exaggerating companies' financial strength, in the hope of getting investment banking business from these firms

• auditing firms disregarding dubious accounting practices, in the hope of getting additional consultancy work from the companies whose accounts they audit

• people in banks' mergers and acquisitions departments doing insider trading or dealing

• profiting from advance knowledge of takeovers. See the Reading and Discussion sections in this unit, and the Tapescript of the interview with Steve Harrison.

Lead in

Discussing the Ooonesbury cartoon (from 2002. after Enron, WorldCom and a number of other accounting scandals) is a way into this unit. Mike Doonesbury’s teenage daughter Alex mistakes the newspaper's business pages for the crime pages. The cartoonist Gary Trudeau seems to be suggesting that there is a lot of financial crime going on, and that perhaps some of its perpetrators ought to go to prison. Do the learners agree?

Learners might be aware of the temptations or the possibilities that present themselves to various financial organizations, and the potential conflicts of interest that arise in business and finance (mentioned in the Background above). The second question asks whether learners have ever had any problems with financial institutions as customers. Asking them to talk about their professional experience would be more delicate.

Reading: Conflicts of interest

Learners who have some knowledge of the financial world or are already working in this sector will probably have more to say about these subjects. However, you can ask learners if they have heard of any scandals involving insider dealing as this is the subject of the fourth situation. Two of these situations (a and c) are also mentioned in the second Listening activity.

ANSWERS

1.2

a Potential problem: In the 1920s, some American banks sold such securities to their own customers, when this was obviously not the best possible investment for their customers (because there had to be a good reason why nobody else wanted the securities).

Potential solution: To prevent commercial banks (with depositors) from underwriting securities, and only allowing investment banks to do this. In the US, the Glass-Steagall Act of 1933 did this. However, this act was repealed in 1999.

b Potential problem: Banks competing to get investment banking business from companies might be tempted to issue research reports about these companies that exaggerate their financial strength, and in this way convince investors to buy their stocks. As mentioned in Unit 1, ten of New York's largest banks were fined a total of $1.4 billion for doing this in 2002. Potential solution: One of the provisions of the Sarbanes-Oxley Act, passed in the US in 2002, is that research analysts have to disclose whether they hold any securities in a company they write about, and whether they have been paid any fees by the company. However, this would not prevent researchers who are trying to get work from companies, who don’t possess any of their shares and are not being paid by them, from writing inatcuidie reports.

c Potential problem: Auditing firms seeking consultancy work with the companies whose accounts they audit might be tempted to let their clients get away with what is known as ‘creative accounting’: using all the tricks and loopholes of accounting in order to hide losses or increase the declared profit.

Potential solution: An obvious solution is for auditing firms to split off their consultancy department into an entirely separate business from the auditing firm. This was another of the provisions of the Sarbanes-Oxley Act.

d Potential problem: This gives huge opportunities for insider dealing: buying or selling securities, and making a capital gain, on the basis of privileged information one has because of one’s job.

Potential solution: Most banks have what they call ‘Chinese walls’ surrounding departments that have confidential price-sensitive information. This means that no information should leave the department, and banks threaten tough penalties for people who reveal or use confidential information. But of course when information is leaked it is very difficult to prove who did it.