Week 4 - FINA 4370 701 Advanced Investment Management,...

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Unformatted text preview: FINA 4370 701 Advanced Investment Management, Ethics and Society Christopher K. Merker, CFA Adjunct Professor, Marquette University College of Business, Department of Finance AIM Program Week 4 – February 10, 2010 Christopher K. Merker ©2009 Agenda • Quiz • Lecture – Ethics in Financial Markets, Professionalism and Capital Markets Integrity • In class mini-case and discussion • Assignment Christopher K. Merker ©2009 Housekeeping • First assignment feedback and grades • Report #1 topics – Deutsche Bank – Conflicts of Interest in Analysts Recommendations – Macquarie – Market Manipulation – Barclays – Improper Trading Practices (Strong Capital) – Goldman Sachs – Conflicts of Interest in Analysts Recommendations (WorldCom) – JP Morgan – Market Manipulation (Drexel Burnham Lambert) • Updated syllabus – Change to March 31 class (Week 11) Christopher K. Merker ©2009 Quiz Christopher K. Merker ©2009 Module 2: Ethical Decision Making and Issues in Investment Management Topic 2: Ethics in Financial Markets, Professionalism and Capital Markets Integrity Christopher K. Merker, CFA Adjunct Professor, Marquette University College of Business, Department of Finance AIM Program Week 4 – February 10, 2010 Christopher K. Merker ©2009 Ethics in Financial Markets • The broad aim of financial markets is fair and orderly markets. • The concept of fairness and equity gives rise to an equity/efficiency trade-off • Remember - we either transact (fairness) or contract (agent or fiduciary responsibility) in the markets. 6 Christopher K. Merker ©2009 Four types of unfairness • Fraud and manipulation • Unequal information • Unequal bargaining power • Inefficient pricing 7 Christopher K. Merker ©2009 Result in either harm to individuals and to the market system as a whole or a violation of rights. Fiduciary Duty 8 Christopher K. Merker ©2009 A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties, most commonly a fiduciary and a principal. One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment. In a fiduciary relation one person, in a position of vulnerability, justifiably reposes confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests. “ A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. Breach of Fiduciary Duty Law & Legal Definition. Legal Definitions Legal Terms Dictionary....
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This note was uploaded on 03/19/2011 for the course ACCT 440 taught by Professor Smith during the Spring '11 term at Saginaw Valley.

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Week 4 - FINA 4370 701 Advanced Investment Management,...

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