Although only required to discuss two associations this writer thought it was important to discuss the SEC as they are directly connected to FINRA in that they take litigation cases, and fraud cases from FINRA and follows up on whether any security laws or criminal laws were broken. Once they investigate the wrong doing they proceed with the corrective action that best suits the offense not excluding criminal prosecution and jail time. According to the Securities and Exchange Commission (2014) website the mission of the SEC is to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation”. The SEC was created to ensure that all investors big or small have a fair and unbiased account of a companies transactions and current state of affairs.
How They Shape the Industry
Due to the fact FINRA and the SEC both hold a much bigger role in shaping the industry we will start with them, and then wrap up with the CBBB. Importance on how it shapes the industry is the reasoning behind this process.
So what exactly does FINRA do, and how does that tie into the SEC? The first and foremost thing FINRA does is to enforce regulations and laws to discourage wrongful conduct. According to the FINRA website (2014):
“FINRA’s mission is to safeguard the investing public against fraud and bad practices. We pursue that mission by writing and enforcing rules and regulations for every single brokerage firm and broker in the United States, and by examining broker-dealers for compliance with our own rules, federal securities laws and rules of the Municipal Securities Rulemaking Board”.
Basically FINRA plays police officer for the SEC. FINRA (2014) investigates complaints brought about by those who feel they ...
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...es, their managers, and their employees all act accordingly and fairly when selling products in the market place. According to Hekman (2011) in 2010 alone the BBB received over 25,000 complaints from consumers and success rate nearly perfect at 84% for creating a binding resolution for the consumer. This shows that it can help shape ethical behaviors in business, by working with managers and clients to create a mutual understanding of expectations from the general public of a company.
Conclusion
In conclusion these organizations help to shape the standards within the business community and help to create trends by enforcing laws, and regulations. The three can even at times work in unison to aid in protecting the overall public by combining forces. Always strength in numbers. Its how the all three organizations work independently as well, strength in numbers.
Third Star Financial Services is an “un-banked” business that was built from a foundation of several money transfer operations that can be transact through an agent or an online facility since 1996. Third Star’s goal and objective is to develop and implement an enterprise architecture platform for the organization that is more streamlined and leaned with consistent policies and procedures throughout the company. A consolidated, centralized and standardized single version of the business structure and a modernize technology that can provide ease and flexibilities to their new and existing customers, in addition to their support staff and management teams.
The Sarbanes-Oxley Act was drafted to encourage and protect whistleblowers from retaliation after the fraud scandal that cause the collapse of Enron in 2001. In a 2010 Senate Report found that “external auditors detected only 4.1 percent of uncovered fraud schemes, “whistleblower tips detected 54.1% of uncovered fraud schemes in public companies” and were thirteen times more effective than external audits” (Turpan, 2016). Whistleblowers serve an important service to the public and are more effective than external audits. The CFAA has been used to by employers to retaliate against employees who act as informants for agencies like Internal Revenue Service or Security Exchange Commission to expose fraud. There employees, not to their financial gain, gather information as evidence of fraud by the company. With a broad interpretation of CFAA, the employee would "exceed their authority" and was "unauthorized" to access the information, therefore allowing the company to hide their illegal
Lahdesmaki (2005) argued that marketing can be an ethical contract between businesses and their customers. Therefore businesses are morally obliged to inform their customers about the products in store and provide all the information necessary via marketing strategy so the customer can make informed decisions about their purchase.
The Dodd-Frank Wall Street Reform and Consumer Protection Act’s policies haven’t really been implemented to the extent that regulators would have liked. Although the legislation takes many steps in addressing systematic risks in the United States financial system and improving coordination among regulators, some critics believe that alternative options might have been more effective. The coming years will give us a better understanding of how well the Dodd-Frank Act addressed these concerns.
Effective organizations are able to clearly define their ethical expectations by setting high moral standards, writing codes of conduct, and utilizing mentoring programs. “Masters provide your servants with what is right and fair, because you know that you also have a Master in heaven” (Col. 4:1). When organizations clearly define their ethical expectations to their subordinates, they are much more likely to treat their customers fairly. Customers who are treated fairly are much more likely to be loyal consumers of the products or services that the company provides. This helps to establish a loyal customer base that a business can depend upon, thus providing a predictable source of annual revenue. If an employer treats their employees with respect, honesty, and with candor they’ll give the customer 110% (Rion, 2001).
The Federal Open Market Committee, consisting of the seven members of the Board of Governors and five members elected by the Federal Reserve banks, is responsible for the determination of Federal Reserve Bank policy in the purchase and sale of securities on the open market. The Federal Advisory Council, whose role is purely advisory, consists of 12 members if they meet membership qualifications.
After the crash reform acts were put into place to once more stabilize the market. The first step was the formation of the Securities and Exchange Commission or the SEC. The role of the SEC was to lay down the market regulations and enact discipline in case of any infringement of said rules. Secondly the Glass-Stegall Act was passed. The Glass-Stegall Act states that the investment and the commercial banks could no longer have any involvement.
securities industries issue to stockholders and to the government detailed annual reports. These would contain information essential to the consumers. Also railroads and utilities were required to submit annual reports to regulatory commissions. The regulatory commissions and the annual reports were created to make sure that laws would be followed. The laws benefited the investment banking industry in the long run, because it helped companies sell stocks and bonds by giving investors confidence in the decisions they were making.
Ethics or rather morals entail mechanisms that defend, systematize as well as recommend conceptions of right or wrong. Many organizations develop ethical codes to ensure employees and employers understand the difference in doing good or bad. In that respect, ethics are an essential aspect of successfully running of any organization or government. Ethics ensure employee’s productivity levels are up to the required standards. It also assists them to know their rights and responsibilities. Additionally, employers, as well as any persons in management, are guided by them to ensure they provide transparent leadership. Ethics also defines how customers should be handled. Ethical codes govern the relationship between customers and an
Major banks are cutting back on some of their legally permitted operations, such as- market making, and that has led to liquidity issues in the bond markets. Proprietary trading could become unregulated if more banking activities continue moving towards the shadow banking system. This would essentially defeat one of the main purposes of Volcker Rule. [d] The third major unintended consequence has been the degree by which the Federal Reserve has become the main regulator of the finance industry. In order to discourage future bailouts similar to the ones during the financial crisis, the Dodd-Frank Act limited the Fed’s emergency powers. However the liquidity and capital standards now imposed by Fed has purportedly become one of the most important regulatory developments of the Dodd-Frank Act.
Kushmeider, Rose. "The U.S. Federal Financial Regulatory System". Federal Deposit Insurance Corporation. Modified 19 March 2006. Web.18 March 2014
This class discusses unethical conduct in business. The Better Business Bureau or BBB is a nonprofit organization that is focused on protecting consumers from deceptive and fraudulent dealings in the marketplace and earning buyers trust (Ferrell, Fraedrich, & Ferrell, 2018). Prior to the BBB, Coca Cola had a law suite filed against then claiming false advertisement. One of Coca Cola’s managers, Samuel Dobbs, made it his mission to create truthful standards for all advertising claims, and the BBB was founded. In recent years, the BBB has faced some ethical issues within the company.
...mmunity. In addition, businesses should not play by their own rules because they would put rules to their own advantage and ignore consumer’s rights. There is no doubt that businesses want to motivate themselves to maximize profits; however, that should not be acceptable it the consumers livelihood is at stake. Businesses and organizations influence the community at large therefore they should be responsible for their community and indeed implement ethical behavior.
SEC regulations of insider trading lack material justification as insider trading is not unfair or inequitable. Furthermore the market effects of such regulations are undesirable and are empirically unfair and inequitable to average traders, insiders and non-insiders. Moreover, they are ineffective and costly. Meanwhile, the benefits of insider trading, including efficient market valuation, price stability, fraud detection and entrepreneurial compensation are important aspects of a healthy functioning capitalist economy that should be permitted to prosper
...n the stock broker is in full control they are trust worthy enough to make the right decisions to increase your profits from your investment. By giving the broker all your information with no type of legal limits, they can do whatever they feel like. The broker can give you improper investment advice, make unsuitable decisions, commission churning, hide prices, and not diversities your portfolio. At the end all these occurrences can affect your profit to increase the stock broker’s profit. When you are dealing with investors (stock brokers) you should do a great amount of research. The research will pay off at the end because you will know the surface of the stock market and its ways. You should always get a copy of an original copy. When signing documents you should always sign in black pen. The stock market can either make or break you; it is just how you play it.