In the Long Term Ethics' Benefits Outweigh Burdens

Ethics can disclose hidden conflicts before they erupt into sudden crises. On the other side, when ethics is put aside firm opens itself up to internal dissention, that likely results in potentially adverse consequences when the unethical actions come to light.

Ethics Impacts on Reputation, Profits and Share Value

Honest profit rests easy on the conscience. Also contributes to corporate reputation and share value. Ethical performance enhance employee morale, community relations, client satisfaction, inhibit the incidence of costly litigation and negative publicity.

Ethics is importance not only in contributing to the financial performance but also for indirect enhancement of operating efficiency and profitability. It occurs through enhanced employees and client satisfaction.

Ethics Reduce Compliance Costs at the From and Industry Level

There are significant cost savings inherent in the shift from after-the-fact control systems to preventing (before malfeasance systems)

Preventative controls -> inherent risk of loss high (cash and negotiable securities)

Monitoring or Detective controls -> risk is low (prepaid expenses) Has high benet-to-cost ratio.

Individual responsibility

Safeguard a corporation's ethical standards requires a team effort and an ethics-reinforcing culture.

Stakeholder theory posits that the corporation has responsibilities to numerous parties that have a "stake" in the enterprise. (Oppose to traditional approach shareholders)

Ethical responsibility is aligning the interests of those stakeholders (include employees and their families and etc) to the greatest degree possible.

Stakeholders:

• the individual (family, self and profession)

• the firm (co-workers; team; employer)

• the business (clients and prospects; retail and corporate investment community and suppliers)

• the public (host communities, regulators, bus media, environment and society)

Responsibilities to Self

One responsibility is to welfare of self and family. Financial needs, loyalties to friends, obligations to family will affect the individual's decision.

Enlightened self-interest can include potential benefits such as salary, career-based training, measure of employment security and chance for self-improvement.

Responsibilities to Co-workers

Second most important responsibility is the one for co-workers. "Treat others as you want to be treated. Ensure that co-workers are able to carry out work at a professional level. Rep wants to rely upon a responsible co-worker.

Responsibilities to the Profession

Responsibility to one's profession via registration and accreditation and membership with regulatory bodies and industry associations.

Responsibilities and accountabilities to the profession:

• act with knowledge that self-regulation is a privilege.

• teach and be taught.

• enter into associations or relationships only if you can maintain your professional integrity.

• use a professional designation in a dignified and judicious manner.

• do not engage in any professional conduct that involves dishonesty, fraud, deceit, or misrepresentation.

• do not commit any act that reflects adversely on your honesty, trustworthiness, or

• professional competence.

• whistle blow when the facts relating to wrongdoing are compelling

Responsibilities to the Employer

Employees are responsible to disclose all matters that reasonably could be expected to interfere with either their duty to the employer or their ability to make unbiased and objective recommendations.

Employees have rights such as fair compensation, dignified treatment, clear instructions and measure of personal privacy. But rights carry obligations.

Responsibilities to Clients

Customer comes first in many corporate statements of mission or purpose.

Code of Ethics identifies responsibilities and accountabilities to clients. It includes:

• first the interests of the client.

• KYC and treat with respect.

• practice competently and without impairment.

• know and comply with all applicable laws, rules, regulations and/or professional association requirements.

• maintain and improve your knowledge, skills and attitudes.

• know limitations and the competence of others.

• recommend that additional opinions andservices be sought.

• responsible advertising.

• faithfully follow a client’s instructions.

• consistent with securities regulations as well as corporate and professional codes, disclose at, or prior to, a transaction any related compensation or economic benefits such as prizes, trips and other gratuities.

Responsibilities to Shareholders/Partners/Board of Directors

IA should have corporate loyalty to the firm. Business should focus not on shareholders but on corporation. Passive Boards of Directors are quickly being replaced by new norms and standards of conduct and accountability.

Board seen as the guardian of the firm's values.

Boards as overly dependent and linked to management are coming under increasing criticism from large institutional investors. Under Sarbanes-Oxley Act more independent boards are being mandated for firms trading on NYSE and NASDAQ

Responsibilities to Competitors and the Securities Industry

Firm and its reps must constantly be conscious that they must earn the public's trust each and every business day.

There are compelling reasons for IAs to behave responsibly to competitors:

1. The actions of single, high profile, dishonest and disreputable employee can damage the entire industry's reputation

2. Everyone benefits when the securities industry lives up to its rules and standards.

3. Fair competition is both desirable and legally mandated.

Responsibilities to Society and the General Public

Responsibility to give back to the community.

Directly: volunteer time, giving charity and participating in workplace philanthropy programs.

Indirectly: workplace recycling programs, donating office space, used computers to community groups.

Society can use means like withholding business, the ballot and regulatory changes to register its dissatisfaction if company does not care about society views.

Ethical Obligation to Blow the Whistle

In Theory: moral responsibility and accountability to identify and act on ethical malfeasance is laudatory and virtuous.

In Practice: often neither welcomed nor protected. Whistle Blowers can lose a job, home, health. chance of ever working again.

PIPEDA protects whistle blowers from retaliation by their employers.