Ethical vs. Legal Standards
Laws and regulations may be another way to force compliance with ethical behavior. Most financial markets are regulated and/or legislated by a government that prescribes a minimum standard of behavior. Since there are such laws and regulations, do you think an ethical code is redundant?
That's right.
Not quite.
What do you think is an example of an action that may be ethical but illegal?
No. Insider trading is unethical, but it may or may not be illegal.
Actually, no. Money laundering is both unethical and illegal.
Yes!
Depending on the action revealed, whistleblowing could be illegal but in fact is considered ethical.
Laws and regulations can be created proactively—that is, in anticipation of behavior that would damage the financial markets. They can also be created retroactively, in response to damage done to the financial markets.
What do you think is an advantage of creating a law to regulate or prohibit unethical behavior?
Bingo. This would be the desired result of a law or regulation prohibiting unethical behavior.
No. This would actually be a _disadvantage_ to using law or regulation to discourage unethical behavior.
Well, not really. In fact, the time lag that is created to enact and enforce a law often allows for unethical behavior to mature, making it easier for actors to circumvent the eventual law against it.
In summary:
[[summary]]
There are many aspects of an ethical code that may not be covered by law, because it's not a government's responsibility to enforce them, or because it isn't practical for a government to do so.
Yes, because laws and regulations cover all ethical decisions
No, because not all ethical decisions are covered by laws and regulations
Insider trading
Whistleblowing
Money laundering
With the force of law, unethical behavior may become rarer
The time lag to enact and enforce the law could discourage such unethical behavior
Making one kind of unethical behavior illegal could encourage investors to seek out other, equally unethical but not yet illegal behavior
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