Unethical Practices in Finance
UNETHICAL
Describing unsuitable behavior, even if the behavior is legal. Unethical behavior may violate a code of conduct for a particular industry or sector. Professional organizations may censure or revoke the licenses of those professionals who are found to have committed unethical acts.
SOME EXAMPLES OF UNETHICAL PRACTICES
1. Holding up bills of vendors on silly reasons and ultimately buying from others to avoid payments to earlier vendors.
2. Delay in paying wages, interest to financiers, incentives, bonus to employees.
3. Cheating employees of their dues towards medical expenses, leave travel assistance, children education fees, etc.
UNETHICAL THINGS IN FINANCE
FRAUD
A fraud is a dishonest act by an employee that result in personal benefit to the employee at a cost to the employer. Example- a bookkeeper in small company diverted Rs. 75000 of bill payment to a personal bank account over a three year period.
MISLEADING FINANCIAL STATEMENT
Before investing money investor want to know the company's financial position and performance. They want to see the balance sheet and income statement. So, financial companies sometimes intentionally prepare false financial statement to improve their chances of getting invested.
INSIDER TRADING
A trading of corporation's stock or other guarantees by individual with access to non-public information about the company, it is unfair would destroy the security markets by destroying investor trust.
THE KETAN PAREKH SCAM
The Ketan Parekh scam was the second biggest scam the move backward the Bombay Stock Exchange after the Harshad Mehta scam. Ketan Parekh was also known as the Pied Piper of the Dalal street. When Harshad Mehta(biggest scammer of the Bombay stock market) believed to be single handedly driving the stock market, Ketan Parekh had created a 200% annual return on some stocks. Then, the low profile Indian stock market was instantly once again making caption all over the world. Later, it turned out that it was broker turned operator Ketan Parekh that was operate the market and not changes in the fundamentals.
THE ILLEGALITIES
The complication with Ketan Parekh's dealing was two-fold:
1. Firstly, he had been receiving money from the supporters of many companies to take their share prices up. This can be seen as insider dealing and by itself was enough to get Ketan Parekh into severe difficulties.
2. However, to top it up, Ketan Parekh had also rob large amounts of cash from the Madhavapura Mercantile Commercial Bank. He was trust to have suborn the officials of the said bank to move them to lend against shares to a greater extent than was permitted by law. At first, the bank crossed its prescribed limits to lend against market securities as it extended credit to Ketan Parekh. Then the bank basically started making unsecured loans to him. The loans would be permitted first and the security would be collected a few days later making the loans unsecured for the interim duration.
Describing unsuitable behavior, even if the behavior is legal. Unethical behavior may violate a code of conduct for a particular industry or sector. Professional organizations may censure or revoke the licenses of those professionals who are found to have committed unethical acts.
SOME EXAMPLES OF UNETHICAL PRACTICES
1. Holding up bills of vendors on silly reasons and ultimately buying from others to avoid payments to earlier vendors.
2. Delay in paying wages, interest to financiers, incentives, bonus to employees.
3. Cheating employees of their dues towards medical expenses, leave travel assistance, children education fees, etc.
UNETHICAL THINGS IN FINANCE
FRAUD
A fraud is a dishonest act by an employee that result in personal benefit to the employee at a cost to the employer. Example- a bookkeeper in small company diverted Rs. 75000 of bill payment to a personal bank account over a three year period.
MISLEADING FINANCIAL STATEMENT
Before investing money investor want to know the company's financial position and performance. They want to see the balance sheet and income statement. So, financial companies sometimes intentionally prepare false financial statement to improve their chances of getting invested.
INSIDER TRADING
A trading of corporation's stock or other guarantees by individual with access to non-public information about the company, it is unfair would destroy the security markets by destroying investor trust.
THE KETAN PAREKH SCAM
The Ketan Parekh scam was the second biggest scam the move backward the Bombay Stock Exchange after the Harshad Mehta scam. Ketan Parekh was also known as the Pied Piper of the Dalal street. When Harshad Mehta(biggest scammer of the Bombay stock market) believed to be single handedly driving the stock market, Ketan Parekh had created a 200% annual return on some stocks. Then, the low profile Indian stock market was instantly once again making caption all over the world. Later, it turned out that it was broker turned operator Ketan Parekh that was operate the market and not changes in the fundamentals.
THE ILLEGALITIES
The complication with Ketan Parekh's dealing was two-fold:
1. Firstly, he had been receiving money from the supporters of many companies to take their share prices up. This can be seen as insider dealing and by itself was enough to get Ketan Parekh into severe difficulties.
2. However, to top it up, Ketan Parekh had also rob large amounts of cash from the Madhavapura Mercantile Commercial Bank. He was trust to have suborn the officials of the said bank to move them to lend against shares to a greater extent than was permitted by law. At first, the bank crossed its prescribed limits to lend against market securities as it extended credit to Ketan Parekh. Then the bank basically started making unsecured loans to him. The loans would be permitted first and the security would be collected a few days later making the loans unsecured for the interim duration.
Make sure that you share your point of view in the comment section.
Thank you
Bhavesh Kukreja
awesome work
ReplyDeleteContent is brilliant. Keep it up
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Delete🌹
ReplyDelete🙂
DeleteNoise work
ReplyDeleteenvironment exploitation has become a massive problem in present days.well written
ReplyDeleteThanks bro
DeleteWhat do you think is most unethical?
ReplyDeleteCheating employees is the most unethical practice
DeleteYour information was very helpful thanks and keep writing these types of blogs.
ReplyDeleteYour information was helpful.
ReplyDeleteThanks
👍👍
ReplyDeleteKnowledgeable article😀
ReplyDeletewhat are the safety measure are taken by finacial instituion to rectify these scams?
ReplyDeleteThey should improve their policies and values.
Delete