The Sydney chapter of the Certi­fied Financial Analyst Society held a discussion on ‘rebuilding trust in the investment industry’ last month, and members of its employer advisory board were asked what ethical dilemmas they had faced in their careers. Emilio Gonzalez, head of global eq­uities at Perpetual and past president of the global CFA Society, did not have to think back too far for his last curly one. “When the ban on the short selling of financial stocks came on, it was clear there were ways around it.

You could use synthetics to achieve the same out­come, it had the result that the regula­tors were trying to manage against.” Students of the CFA exam learn that ethical behaviour means always putting the interests of clients ahead of your own. Gonzalez admits that skirting the short-selling ban might have had an im­mediate benefit for investors, but “it was against the spirit of the law…and any risk that ASIC will come knocking on your door is certainly not in your clients’ long-term interests”. Meanwhile Michael Clancy, head of MLC’s investment management division, had a debate with himself over whether MLC should offer protected investment products.

Clancy could not satisfy himself that the provider of the protection, which is punting its balance sheet on the deal, would always act to protect the individual investor ahead of the strategy. “Unless there is a crystal clear way of explaining the risks, returns and benefits of a product, the best decision is not to do it,” he said.

Again, this might not have helped the shareholders of MLC’s parent, Na­tional Australia Bank, in the short-term, however Clancy said the interests of clients and shareholders were correlated over time. Being an increasingly global body, one ethical issue the CFA Society has to be careful with is the accepting of gifts. The Sydney Society’s current presi­dent, GMO’s Olivia Engel, points out that refusal to accept a gift is a highly offensive deal-wrecker in some cultures, so the CFAs are encouraged to use their own discretion.


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