Michael McMillan, CFA, was director of Ethics and Professional Standards at CFA Institute, where he was responsible for creating, sourcing, and developing educational content for CFA Institute members and investment professionals in the area of ethics and professional standards. Previously, he was a professor of accounting and finance at Johns Hopkins University’s Carey School of Business and George Washington University’s School of Business. Prior to his career in academia, McMillan was a securities analyst and portfolio manager at Bailard, Biehl, and Kaiser and at Merus Capital Management. He is a certified public accountant (CPA) and a chartered investment counselor (CIC). McMillan holds a BA from the University of Pennsylvania, an MBA from Stanford University, and a PhD in accounting and finance from George Washington University. Topical Expertise: Financial Statement Analysis · Standards, Ethics, and Regulations (SER)
SAC Capital Advisors has agreed to plead guilty to insider trading violations, but owner Steven A. Cohen still faces SEC charges that he failed to “reasonably supervise two of his senior employees who engaged in insider trading under his watch.” These charges should make all investment professionals with supervisory responsibilities stop and think about whether they are “reasonably supervising” their employees.
Willful blindness on the part of investment professionals, financial institutions, and investors was a contributing factor to the 2008 crisis. What can be done to prevent it from happening again?
The stories of disgraced former UBS traders Tom Hayes and Kweku Adoboli illustrate the perils faced by young professionals just as their talents and high potential are beginning to get recognized.
“Tone at the top” is a mantra that we hear time and again as the cure for the ethical decay that is permeating financial organizations. But if the industry really wants to create a culture of integrity, it must also establish a “tone at the middle.”
Impact investing, a rapidly growing sector of socially responsible investing (SRI), represents the nexus of philanthropy and traditional finance: It expands the definition of return on invested capital to include both financial and social returns.
Promoting better gender equity on corporate boards is not only about ensuring fairness but also about improving financial performance.
Whistle-blowers provide a real benefit to companies: Fraud costs a typical company about 5% of its revenues, and whistle-blowing is the single most common method of fraud detection. Recent studies show, however, that retaliation against whistle-blowers is on the rise.
The largest corporate fraud in Chilean history offers a cautionary tale not only about improper accounting and misleading financial statements but also about the importance of implementing an organizational culture that encourages employees to take action when they observe unethical behavior.
Simon Lack, CFA, author of "The Hedge Fund Mirage," says that the popularity of hedge funds may be unwarranted given the performance history, lack of transparency, high fees, and minimal investors protections. All of these factors, he says, should be weighed carefully before investing.
John R. Boatright discusses the ethical issues facing investment professionals in the investment industry and how to manage them.
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