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Channel: Michael McMillan, CFA – CFA Institute Enterprising Investor
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Take 15: Ethical Behavior in the Investment Industry (Video)

John R. Boatright discusses the ethical issues facing investment professionals in the investment industry and how to manage them. Read more →

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Four Key Factors That Every Hedge Fund Investor Should Consider

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...

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The Case of Empresas la Polar: Encouraging Whistleblowers Can Serve a Firm’s...

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...

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Retaliation against Whistle-Blowers: No Good Deed Goes Unpunished

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...

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Why Investors Must Push Harder for Greater Diversity on Corporate Boards

Promoting better gender equity on corporate boards is not only about ensuring fairness but also about improving financial performance. Read more →

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Impact Investing: Turning a Profit and Changing the World

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...

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Culture of Integrity Requires Financial Firms to Renew Focus on Middle...

“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...

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Are Young Investment Professionals Especially Vulnerable to Ethical Lapses?

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. Read...

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How the Financial Industry Can Cure Its Willful Blindness

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? Read...

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Supervisory Responsibilities: “See No Evil, Hear No Evil” Won’t Fly

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...

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Canada May Be the “Cleanest Shirt in the Hamper,” but It Still Faces Some...

When it comes to fixed income, Canada is the cleanest shirt in the hamper. The reason, says Ed Devlin, executive vice president and head of Canadian portfolio management at Pacific Investment...

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Are Structured Products and Complex Credit Assets the Phoenix of the...

As the Roman epic poet Virgil wrote in the Aeneid, “Fortune favors the brave.” For investors who live by this creed, complex credit assets and structured investments — once the scourge of global...

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Is It Déjà Vu All Over Again?

The Wall Street Journal has published a number of articles about Groupon, the ecommerce internet company that is planning to go public. A July 28th article focused on Groupon’s use of a “non GAAP”...

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The Ethical Lessons of Rogue Trading

As Albert Einstein famously said, “Insanity is doing the same thing over and over and expecting a different result.” This quote comes to mind in the wake of the drama that has unfolded at UBS, where...

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The Bizarro World of FAS 159

Do you remember the episode of Seinfeld titled “The Bizarro Jerry”? In this episode, which was based on Bizarro Superman, everything is backwards, i.e., up is down, down is up, in is out, out is in....

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History Repeating Itself: Groupon’s Questionable Accounting Practices Are...

A few months ago, I wrote about how Groupon had been using a non-GAAP accounting metric, “adjusted consolidated segment operating income” (CSOI), to explain its past performance — a practice the online...

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The Consequences of Insider Trading: A Cautionary Tale

Who says that one bad apple doesn’t spoil the whole bunch? Just ask FrontPoint Partners who saw its assets under management decline with breathtaking speed—dropping by $6 billion in eight months—after...

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Trust is in the Details: Why Advisers Need to Close the Knowledge Gap on...

A recent survey suggests that some investment advisers may be recommending alternative investment strategies that neither they nor their clients fully understand. In order to regain the confidence and...

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The Hildebrand Case: Ethics and the Power of Perception

The recent scandal that led Swiss National Bank chairman Philipp Hildebrand to resign highlights the difference between what is legal and what is ethical. The law tells us what we “can and cannot do,”...

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Dubious Measures: Hedge Funds’ Reporting Draws Scrutiny

There is a plethora of research that has documented a number of “irregularities” in self-reported hedge fund returns. These studies have found that some hedge funds reported smoothed returns, reported...

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Africa: The Land of Alpha

The famed hockey player Wayne Gretzky once said, "A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be." Frontier markets — especially those in Africa...

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Ethics Roundup

Unfortunately, stories of unethical behavior by both individuals and financial institutions continue to dominate the business news headlines. Insider trading and the integrity of asset managers'...

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Codes of Ethics: If You Adopt One, Will They Behave?

Many institutions involved in the financial skullduggery that caused the 2008 crisis had adopted codes of ethics long before the housing bubble burst. Even Enron had espoused lofty ideals in it's...

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Three Questions about the Facebook IPO

Unless you have been living under a rock, you must be aware that Facebook, the “darling” of social media, is about to go public. But before investors slake their thirst for Facebook shares, market...

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Population Growth Bodes Well for African Economies

The world population has surpassed 7 billion people. As inhabitants of Earth first, and investors second, should we be concerned? According to economist and demographer Richard Hokenson the answer is...

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Take 15: Global Demographic Trends and Investment Opportunities in Africa

Richard Hokenson discusses the investment implications of global demographic trends and the investment opportunities these trends represent for Africa.

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Ethics Roundup: Widespread Insider-Trading Crackdown on the Horizon

“Even the most rational approach to ethics is defenseless if there isn’t the will to do what is right,” Alexander Solzhenitsyn said. This quote came to mind after reading about widening investigations...

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How to End Insider Trading: More Guidance and Fuller Disclosure

The easiest, least expensive, and most effective way to reduce information trafficking would be for public companies to be more open and honest with investors and shareholders.

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Performance Measurement: The What, Why, and How of the Investment Management...

According to Carl Bacon, CIPM, chairman of StatPro, active investment managers must understand the “what, why, and how” of their past performance in order to effectively manage their current clients’...

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Ethics and Social Media: Four Key Considerations for Investment Professionals

While some governments have provided guidance to the investment industry about the use of social media, many countries have yet to issued regulations. Regardless of what local bodies dictate, the CFA...

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Five Reasons for a Uniform Fiduciary Standard

In order to have fair and transparent markets, all investors must feel confident that the investment advice, products, and services offered by investment professionals are not only suitable for them...

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Take 15: Investing Globally: The Rise of the Middle Class

John P. Calamos, Sr., discusses the rise of the middle class in emerging markets and what investors in these markets should focus on.

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What is Holding Back Economic Recovery in the Developed World?

Finance professor Amir Sufi of the University of Chicago Booth School of Business argues that the severe U.S. recession and Europe's ongoing economic woes can best be explained as aggregate demand and...

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