Sub-section one-point-one d: -- Need for high ethical standards in the Investment Industry

 Financial rewards can motivate people to act in an unethical manner for the short-term gains without recognizing the long-term consequences or risks.

 The loyalty to employers and colleagues may hinder people from behaving in a fully ethical manner.

 Prestige issues may restrict some people from behaving in a perfectly ethical manner and making corrections.

 Overconfidence of the people in their abilities and ethical behavior may result into overlooking the code of ethics and committing unethical mistakes.

Sub-section one-point-one d: -- Need for high ethical standards in the Investment

Industry --

High ethical standards are needed for the investment industry due to the following reasons:

 Investment industry is built on trust mainly.

 The fiduciary nature of the relationship between the investment professionals and the clients.

 Differences between the investment professionals and the clients in the investment knowledge and information access

 Dependence of the clients on investment professionals to use their specialized skills to protect and grow the assets.

Sub-section one-point-one e: -- Difference between ethical and legal standards --

The numerous laws codify the ethical actions or the prescribed behavior for the people or the society. Legal and ethical conduct usually coincides, yet they are not the same always. A legal behavior may not break the law; yet it is not considered ethical. On the other hand, an ethical behavior may not be legal in a country.

Legal standards are not the best mechanism to eradicate unethical behavior. Legal standards often address the past ethical issues. The new laws may affect the markets adversely or may create new opportunities for different type of unethical conduct.

Sub-section one-point-one f: -- Framework for ethical decision making --

A framework for ethical decision making serves as a tool for analysis and evaluation of the different aspects of the ethical conduct in the investment profession.

The framework to identify, consider, act, and reflect provides an excellent mechanism for ethical decision making in ambiguous situations. The framework gives a summary view of ethical decision making and its key elements, which are: --

Identify: It involves identifying the ethical principles involved, duties to clients or others, conflicts of interest, etc.

Consider: It involves considering and evaluating various situational influences and the alternative courses of action.

Act: It involves making a decision, escalating the bigger issues to the higher authorities, etc.

Reflect: It involves reflecting on the learning and experiences gained from handling various situations and making ethical decisions. This helps in ethical decision making in the future.