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Ethical issues in Finance
Financial statements

Hostile Takeovers

Financial Markets
Insider Trading

Fraud in Financial Statements
Fictitious Revenues
Concealed Liabilities and Expenses
Fraudulent Asset Valuations
Improper or Fraudulent Disclosures or
Creative accounting form of
fraudulent financial reporting so as to
provide misleading information.

Ethical Audit
An audit that assess a businesss structures, procedures,
systems and policies.

It measures the extent to which the activities of a
business comply with the standards it has publicly
declared to its external customers

It measures business conduct against varied moral
standards of the community.

Objectives of Ethical Audit
to provide a critical assessment of functioning of business

To investigate into acquisition or restructuring operations

To determine the type of training necessary for employees

To establish ethical conduct of business

To enhance, measure and promote the quality that increases business
performance by assessing them against the ethical business objective

To improve the quality of governance by evaluating the performance and
ensuring that financial information is both available and reliable

Ethical Issues in Financial Markets
Deception: act of misrepresenting relevant
Churning: Excessive or inappropriate trading for
clients account by a broker who has control over
the account with intent to generate commissions
rather than to benefit client
Unfairness in Markets
Insider Trading
Refers to trading on price sensitive information
by company employees or individuals closely
connected with the firm

This information has not been disclosed to
other market participants

Ethics & Insider Trading
It violates equality of opportunity
Does not give a level playing field between
insiders and outsiders
Might harm exchange as a whole because
investors might not be willing to trade on
exchange that does not give shareholders their

Anti-takeover defense measures
Poison Pills

Green mail

Golden Parachute

People Pill

Act with honesty and integrity, avoiding real
or clear conflicts of interest in personal and
professional relationships.
To provide information which is full, fair,
accurate, complete, objective, relevant, timely
and understandable, including in and for
reports and documents that the Company files
with, or submits to, the other public
communications made by the Company.

Act in accordance with all applicable laws, rules and
regulations of governments, and other appropriate
private and public regulatory agencies.
Act in good faith, responsibly, with due care,
competence and carefulness, without misrepresenting
material facts or allowing my independent judgment
to be subordinated.
Respect the confidentiality of information acquired in
the course of business except when authorized or
otherwise legally obligated to disclose the information.
It should not be used for personal advantage.
To promote ethical behavior among our associates.
Adhere to and promote this Code of Ethics.

No business and company can run without finance. It is
LIFEBLOOD for all the organization. So if almost all the
field in finance follows ethics in their duty almost all
other process will function very well without any