Attorneys writing in bankers magazine urged cash

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Unformatted text preview: e millions of dollars each day. Though many saw this as just “aggressive cash management,” a 1985 U.S. Justice Department ruling saw it as fraud (because Hutton was using money that its banks had not yet collected from the check writer and without the bank’s knowledge). Attorneys writing in Bankers Magazine urged cash managers not to use any type of remote disbursement in which the sole purpose is to increase check collection delays, thereby creating float. That float causes a “hold” to be placed on the funds so that the depositor cannot use them. In response to E.F. Hutton’s aggressive practices, the professional association to which many cash managers and treasurers belong implemented an ethical code. Anyone who is designated a “Certified Cash Manager” by the Association for Financial Professionals must agree to maintain the highest standards of conduct, including the standard to “refrain from intentional abuses of financial systems and markets.” Remote disbursing has largely disappeared. However, the fact that many cash managers still see nothing wrong with sending checks to the wrong address or changing disbursement ban...
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This document was uploaded on 01/19/2014.

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