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Ethics Week 6 Slides(1).pptx - Ethics in Finance FIN 330...

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Ethics in FinanceFIN 330Winter 2021Week 6, part IMartin Axelrod[email protected]
CFAStandardsofProfessional ConductI.ProfessionalismII.Integrity of Capital MarketsIII. Duties to ClientsIV. Duties to EmployersV. Investment Analysis, Recommendations, and ActionsVI. Conflicts of InterestVII. Responsibilities as CFA member/candidate
Standard II:Integrity ofCapitalMarketsA.Material Non-PublicInformationB. Market Manipulation
MosaicTheorySecuritiesanalystsandinvestmentmanagersmaytradeandmakerecommendationsoninformationobtained from a mosaic ofoAll (material and non-material) publicinformation ANDoNon-material, non-public informationThis is very important – the makings ofgreat financial decisions!
BroadEthicalFrameworksRelative / SubjectiveConsequential (Egoism, Utilitarianism)Deontological (Immanuel Kant)Virtue Ethics (Aristotle)Freedom (Libertarianism)Equality ( John Rawls)Economic Systems (Capitalism, Socialism)
Immanuel Kant1724 - 1804
TwoFormulations ofthe CategoricalImperative1.Universal Law2.Humanity as an endand not just a means.
BroadEthicalFrameworksRelative / SubjectiveConsequential (Egoism, Utilitarianism)Deontological (Immanuel Kant)Freedom (Libertarianism)Virtue Ethics (Aristotle)Equality ( John Rawls)Economic Systems (Capitalism, Socialism)
The Constitution
MinimalStateAcceptable:oEnforce ContractsoProtect Private PropertyoKeep the PeaceUnacceptable:oPaternalism – laws that protect peoplefrom hurting themselvesoMorals Legislation – using force of lawto promote notions of virtueoRe-Distribution of Income/Wealth –requires people to help others
Objections to Wealth Re-DistributionUtilitarian – the incentive to work is removed/lessenedoverall pool of $ availableshrinks = lower overall utilityLibertarian – to take $ is coercive, a violation of the fundamental right of LIBERTY
Nozick’s“EntitlementTheory”Justice in Acquisition:If you acquireproperty through your own labor or byusing your labor and the fruits of theworld (for example mining, fishing, oragriculture).Then you have absoluteentitlement to the property.Justice in Transfer:If you acquiresomething through a free exchange in themarketplace or from a gift voluntarilygiven, then you are entitled to it.
Libertarian:Potential(Process)vsOutcomeLibertarians would be more likely to support aprocess view of distributive justice than an end-state view.Libertarians believe that governments should notbe concerned with end-state considerations.Thegovernment only concern is assuring a fair processof distribution while not assuring a particularoutcome.
Equality ofOutcomesAssume fair (equal) distribution of income tostartThose who want to see Michael Jordan play payhim $5 to do so – he makes $31MM.

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Term
Winter
Professor
SeanMatthews

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