Author: Adam Lipman
At our recent CFA UK Ethics Steering Committee Book Club, the focus was on Sheelah Kolhatkar’s book ‘Black Edge: Inside Information, Dirty Money and the Quest to Bring Down the Most Wanted Man on Wall Street’.
The book club lead to some interesting, engaging and thought-provoking discussion, where many participants were highly critical of the questionable conduct described in the book. While this common macro view was held, the insights were in the minutia.
The discussion came alive over the different perspective concerning the drivers of the misbehaviour and the ways in which public markets’ insider trading challenges can be dealt with in the future.
Some of the key points we took away from the insightful conversation:
- The importance of compliance officers and board governance challenge to keep top performing ‘Rock-stars’ on the right side of the law as the first and second lines of defence;
- Questions on how law enforcement can overcome well designed information systems which give inside information in a format which is difficult to prosecute;
- Different opinions around government’s role in enforcing the rules evenly, or maximizing publicity over ‘big fish’, figurehead, wealthy individuals;
- Highlighting the importance of good role models and strong ethical corporate culture, with similarities discussed between insider trading and steroid use in sports;
- Finally, ensuring that incentives are designed to effectively maximise performance without encouraging unethical conduct, acknowledging that people are incentivised by more than just money alone
We hope that attendees found the discussions as useful and energising as we did.
How can you get involved?
The Ethics Committee is keen to develop a network of enthusiastic volunteers to promote ethical conversations through the financial profession. If you are interested in participating the Committee’s initiatives and sharing your ideas on the promotion of ethics, please contact Tilly Baker.