provide detailed suggestions (using the best practices discussed and learned in this Topic to enhance the chosen case in terms of preventing and enhancing ethics.

Improving Ethics in Finance Best Practices Hiring Process - good due diligence on employees Compensation structure - rewards for ethical behaviors and punishments for unethical behaviors Corporate Culture - tone from the top and ethics first Corporate Governance - build the right infrastructure Corporate Govern anoe Clear and effective policies and procedures are in place and periodically checked for implementation Code of Conducts is adhered by all Compliance and Audit Personnel serve as the second and the third defense Board of Director provides strong oversight AICPA Principles of Professional Conduct The American Institute of Certified Public Accountants (AICPA) has the following principles of the professional code of conduct In carrying out their responsibilities as professionals. members should exercise sensitive professional and moral judgments in all their activities Members should accept the obligation to act in a way thatwill serve the public interest, honor the public trust. and demonstrate commitment to professionalism To maintain and broaden public confidence, members should perform all professional responsibilities With the highest sense of integrity. Amember should maintain Objectivity and be free ulconflicls oflnterast in discharging professional responsibilities. A member in public practice should be Independent in tact and appearance when providing auditing and other attestation services. A member should observe the professions technical and ethical standards strive continually to improve competence and the duality of services. and discharge professional responsibility to the best of the member's ability. Amember in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided Dealing with Conict of Interest Some best practices include: NP'SJ'PPNT'" Following up on all disclosed actual or potential COIs with employees and their managers to demonstrate the organization's commitment to risk mitigation Making sure employees who review disclosed conflicts are sufficiently experienced and trained to identify conicts and appropriate responses Once a conflict :5 Identied it must be remediated. Remediation depends on the type ofconflicl and the applicable circumstances. Remediation plans may Include: Segregation of the individual from relevant decision-making tag, selection of certain vendors) Transfer of supervisory roles over relevant employees to other members of staff or transfer of role to a different area Disposal of assets that cause the COI Termination of the external activity that causes the COI Agreeing to a protective contractual clause with third parties Declining to proceed with the matter or engagement when no resolution is possible Otherwrse prohibiting continued involvement in the activrty that creates the conflict Eight Simple Ethics Rules for Brokers El {37? When in Doubt. Spell it Out If it even occurs to you that an investor may need or want to know something. tell them. Never succumb to the urge to keep qutet. even when you know this may cost you the deal. Do unto Others Put yourself in the position of the investor. tf you would prefer not to be handled in a certain way. don't do it to someone else. Above all. avoid self-deception. The best test is to ask yourself whether you would want your mother. brother. best friend or indeed yourself to have these investments. Avoid One-Size-Fits-All Approaches Everyone has different needs, preferences and circumstances. They therefore need a portfolio that truly caters to them. The correspondence you send out should also be tailored to each client. Nothing I: more useless to a client than a standardized quarterly letter containing general information that he or she could get from the newspaper or any website. Most clients Will swnch off and not even read them, What customers need is customized information about their own portfolio, howrtsdomg and why. what changes you plan, etc. Ask the Client -Don'rxpecr Them to Aslr You! A client won't ask for clarification if he or she doesn't realize it's needed in the first place. Make absolutely sure that the client knows what he or she is getting. They do not need to know every intricate detail. but they certainly need to know. at minimum, how risky the product is in relation to the probable returns. There should be no surprises in store for the unwary and trusting investor. 59 Specific About the State pfrhe Market You should discuss the market With your client in general and with respect to the specific asset classes. This does not mean attempting to time the market, but the investor ought to know whether the market has been booming for years and is regarded as possibly overpriced. or whether the converse prevails. in the same VEll'i. If people are saying that commercral property may well have peaked, tell that to the client. There is nothing wrong wrth stating that "opinions are divided and it could go either way\". But there f5 something wrong with keeping quiet about potential disadvantages and risks in order to push through the sale. Se Open About Monitoring and Control A client should know how often you Will monitor the investments and what this really means. For instance. will you call the client if there is news in the media that things may go.h.go.lf.tg spur for a particular asset? This also applies to positive new opportunities that can pop up. If all you plan to do is take a look at the asset allocation once a year, that may be OK, but the client needs to know that he or she cannot expect more from you. Show the Client Visually How Things Work The classic multicolor pie chart with asset class combinations for high. low and medium risk is a great way to demonstrate the very essence of the investment process. Likewise. "py 'a 1) :35 or s g\" which show how one moves from a lowsrisk basis of cash. upward through bonds to equity funds and so on. should always be the starting point of the advisory process. Explain Brochures Simply handing your client a pamphlet is not enough. There is a good chance they will not be understood and they may not even get read. Go through the main points with clients. so you can be sure they really understand the main elements of the investment and what the text means. The man in the street does not know the meaning of such phrases as "optimizing portfolio risk.\" "sector allocation." "overweighting mid caps" and dozens of others. Similarly. ordinary investors are generally unaware of the meaning and implications of long-term versus short-term investments. or the difference between investment styles like value and growth. There is an optimal (and minimum!) level of communication and understanding that is essential for good brokering practice