Financial Markets, Regulation and Ethics

Topics: Bank, Money, Interest Pages: 6 (1994 words) Published: May 3, 2013
Exam Number:
Word Count: 1961

MSc in Finance & Management Programme 2012/2013

Financial Markets, Regulation and Ethics

Term 2

Ethics in Finance

This assessment is all my own work and conforms to the University’s regulations on plagiarism| | An identical copy of this document has been submitted to the Turnitin system| |

Hoople Consultants has won a contract to provide engineering advice and support to a city in a developing country. The contract is funded by an international aid bank but is administered by the local officials. The Hoople team is led by Marcella. One day she is asked to go and see the manager of the local client team. The manager says that he and his deputy would like to go on a study tour of the UK so that they and their team can be in a better position to understand more about Hoople. The local manager points out to Marcella that they don’t have the funds to do this so they would like to pay for it through the project. The best way to do this would be for Marcella to pay for all the flights and accommodation and provide some money for meals etc. Marcella can invoice all this through the contract by enhancing the hours billed and the manager will approve it.

Applying the CFA ethical code and any other suitable framework, make a practical recommendation for Marcella .

The local client team wants to visit UK to understand Hoople Consultants better. This is acceptable because, the local team will be interacting with Hoople for a long time, until the project is completed. This trip would make them acquainted with Hoople Consultants better and can in the process they can understand the working, the working methods, the technology used and several other factors of Hoople consultants, which the local team would be exposed to in the future and this will make them better prepared. However, the solution the local client team is proposing is wrong because, Marcella cannot invoice the expenses by inflating the bills as CFA code of ethics says that, members should not make knowingly misrepresent things related to any of the work they are associated with. However, if she does this she is acting against the code, and hence is wrong ethically. The other alternative would be, for Marcella or for Hoople consultants to fund from their own money, to the local client team to visit UK and understand Hoople better. However, this too is against the CFA ethics code, as the code says that, members must not offer any benefit or compensation, that could compromise other’s independence or objectivity. Hence, they cannot fund the local team from their own pockets. The only solution to the problem Marcella is having would be, to ask the international aid bank to fund the local client team for all the expenses incurred by the team when in the UK. The local client team and Hoople consultants should make a presentation to the aid bank, giving them appropriate reasons as to why this trip is beneficial for the both the teams involved. This trip would bring in better understanding of the teams which is beneficial for both the teams in the long run. I see no reason, as to why international aid bank would not support the local team if they give appropriate reasons for their travel. If, the international aid bank does not support the idea of the local client team, then the local client team should raise money from other sources to go to UK. Peter is the treasurer of a FTSE listed company. He is phoned by Andrew from an investment bank where Peter has done some business with another division. Andrew invites Peter to go skiing for a weekend with other clients in Switzerland. There will be many useful contacts including direct competitors of Peter’s company. Peter doesn’t ski but can see the distinct business benefit.

How should he respond? Would your answer be different if the invitation came after a major piece of work had just been completed with Andrew’s team?

According to me, Peter should go to...
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