Ethics
A set of consistent values that guide individual behaviour
Characteristics of Values
They are beliefs, not facts
they are long lasting, but not unchangeable
they guide behaviour
End Values
represents the goals towards which we strive and influence how we act today to achieve tomorrow’s goals (i.e. family security, self respect)
Means Values
the actions we take in the present to achieve a future goal (i.e. honesty, responsibility)
Unified Value System
a system in which the means and ends values mutually reinforce and support each other
Rules based regulation
subject to prescriptive, detailed, and technical standards
Principles based regulation
parallels and overlaps the ethical decision making process, industry participants are expected to apply judgment and discretion
Prudential regulation
(capital adequacy standards) investment dealers maintain an appropriate level of capital and have prudent and appropriate internal controls
Right vs. Wrong Ethical Dilemma
One choice is clearly wrong
Ways to determine right vs. wrong
- legal test
- smell test (intuition)
- front page test (reputation)
- mom test
Types of Right vs Right Dilemmas
- Integrity dilemma: trust vs. loyalty
- Societal dilemma: individual vs. group
- Goal based dilemma: short term vs. long term
- Fairness dilemma: justice vs. mercy
The ends based resolution principle
states that the action chosen should result in the greatest good for the greatest number of people
The rules based resolution principle
states that action chosen should follow the rule that deals most effectively with the situation
The social contract based resolution principle
views the action in terms of how it affects the well-being of the group
The personalist resolution principle
supports the decision that is most authentic to the decision maker
The ethical decision making process
- Identify the issue and determine whether it represents an ethical issue regarding further analysis
- Identify the person who must decide on a course of action
- Gather the facts, identify potential courses of action, and identify the potential consequences of each action
- Test each course of action by applying legal, small, front page and mom tests
- If all options pass the tests, analyze the situation and determine which ethical principles are in conflict
- Apply the four resolution principles to determine the best choice
- Make the decision
What are the 4 resolution principles?
- The ends based principle
- Rules based principle
- Social contract based principle
- The personalist principle
Code of Ethics
a set of rules, either written or unwritten, that specifies the rules of behaviour within a group
Conflict of Interest
occurs when a duty owed to another person is compromised by either a personal interest or a conflicting duty owed to a third party
Agency
a relationship in which one party is authorized to bring another party into contractual relations with a third party
