25602 Ethics in Finance

Subject level: Undergraduate

Handbook description

Ethical practices instil a public trust in the fairness of markets, allowing them to function efficiently. Additionally, ethical practices by finance and investment professionals benefit all market participants and stakeholders and lead to increased investor confidence in global capital markets. The perspectives acquired in this subject are useful to students in their place of work as a framework for ethical conduct in the investment profession is presented by focusing on the CFA Institute Code of Ethics and Standards of Professional Conduct. Citing examples of the scandals that have shaken public confidence in the ethics of Wall Street, this subject explains the importance of ethics in the operation of financial institutions and in the personal conduct of finance professionals.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

1. demonstrate a thorough understanding of the major intellectual theories of ethics as a basis for the analysis and resolution of ethical dilemmas in finance
2. critically examine ethical standards and issues of questionable professional conduct in finance by addressing topical issues related to ethics in investment decisions, financial markets and financial services
3. relate ethical principles to the financial theory of the firm including issues related to stakeholder theory, takeovers, corporate social responsibility and international businesses
4. demonstrate a thorough understanding of standards of professional conduct and recommend practices and procedures designed to prevent violations of ethical and professional financial market trading practices.

Contribution to graduate profile

Ethical practices instill a public trust in the fairness of markets, allowing them to function efficiently. In short, good ethics is a fundamental requirement of the investment profession. This subject aims to allow students to develop specific skills and knowledge of ethical conduct in the investment profession. As a key aspect of this subject is the principles and guidance presented in the CFA Institute Code of Ethics and Standards of Professional Conduct, the subject provides the ethical context in which students will operate when pursuing professional careers in all related financial areas such as investments, portfolio management and financial planning.

Teaching and learning strategies

This subject will be delivered in the normal semester delivery mode, namely a two hour lecture and a one hour tutorial during the three hours assigned each week. The purpose of this unit is to provide up-to-date guidance to the people who grapple with real ethical problems in the finance profession, where theory meets practice and ethics gain meaning. As a consequence, the lectures will incorporate a range of learning strategies including lectures, case studies, class exercises and discussions. Case studies will be used as the basis for tutorials. Content for this subject will be supported by UTSOnline.

Content

• Ethics in the world of business
• Welfare, rights, and justice
• Equality, liberty, and virtue
• Whistle-blowing
• Trade secrets and conflict of interest
• Ethics in finance
• Ethics and corporations
• International business ethics
• CFA Institute standards of professional practice — professionalism; integrity of capital markets; duties to clients; duties to employers; investment analysis, recommendations and actions; conflicts of interest

Assessment

Assessment item 1: Mid-semester Exam (Closed Book & Individual)

Assessment item 2: Final Exam (Closed Book & Individual)

Required text(s)

Boatright, JR, 2009, Ethics and the Conduct of Business, 6th edn, Pearson Prentice Hall, NJ, USA.

Standards of Practice Handbook, 2005, 9th edn, CFA Institute, Charlottesville, VA, USA (free download on the web and UTSOnline)