How to guard against unethical practices

Unethical

Fake Companies: In past years, we saw many fake companies which neither are registered with Regulatory bodies nor have any right to operate legally. But they were working in the society and created big scams over time and many people are cheated and ruined by them and even many customers and agents committed suicide because of their big financial losses. West Bengal Saradha Group financial scandal is one of biggest example of it. They gave very attractive interest rates on fixed and recurring deposits which were 2-3 times higher than the present bank interest rates and even higher that annual stock market returns where so much risk is involved. Company doesn’t have future plans or industries where they can invest those procured money and make profit to return their lenders or common peoples. Eventually they started to getting bankrupt and they were unable to pay that procured money to their customers which they promised. As this company does not come under SEBI or RBI regulations, the investors cannot seek any help from them to recover their financial losses.

Solution: Always check the company’s side view before investing. Greed should be avoided during investing and ask a question to yourself or to the agent “how can a company promises that much heavy returns in the competitive capitalist economy where further companies are incapable to do so”. Check whether the company is registered under the regulatory bodies like SEBI or RBI. Otherwise, if any anomalies happened no one will be going to help you and chance of getting justice will be in dark.

Selling of unprofitable mutual funds by the banks: After doing #mutualfundsahihai campaign by the Association of Mutual Funds in India to raise the awareness about mutual funds among peoples, many people get to know about mutual funds and about stock markets and they show interest towards mutual funds. Banks are the primary brokers of the mutual funds and they get commission by selling those. Then a normal people who doesn’t know very much about MF visit and a bank to purchase a MF, Most of the time Banks take advantage of the unknowingness of the customer and give a mutual fund which is not profitable for the customers and sells only those mutual funds where they get high commission and even sometimes banks don’t want to share the details about the MF what they are selling and ask the customer to believe on them. Eventually at the end customer gets less return and sometimes they are even facing loss by simply choose a wrong MF and banks don’t take responsibility by saying investing on mutual funds is always a risky task.

Solution: Don’t buy any Mutual Funds or any Stocks if you are not fully aware how those work and must understand the risk before buying those components. If bank Officials forces you to buy only those MFs which they are recommending only, you must talk with the higher officials about that and you can lodge a complaint against the bank itself. After buying a MF, always follow up the status of that Fund whether it performing well or not. If it’s not performing well for a long period of time existing then it will be good option to minimise losses.

Solution: Some investors think bucketing is not an illegal or an unethical practice but it creates very bad consequences on the economy as well as country’s revenue. So, people should not do that at any cost. And presently SEBI and MCX takes some serious decision to fight against them, where they need to pay high penalty or even imprisonment. If loss happened investor may face very big financial problem so it’s not treading any way rather than gambling. That’s why investors should away from those operators and don’t get in the trap of greed. At first any investor must understand the working of the stock markets in detail and the reasons and mottos why stock markets are working then only diving on them will be good and make him or her a good investor.

CONCLUSIONS

The issue of unethical business conduct, including financial fraud, is usually credited to flaws in corporate governance that fails to shield stakeholders. Several flaws, such as failure within the board of directors or top management, ineffective internal controls, corporate policies and inadequate regulations has been identified. This study has offered a ethics perspective to help remedy certain flaws in resulting from the failure to set and to exercise ethical conduct from the top. Although it only works partially and cannot remove all flaws in the field, but the ethics of care can provide a complementary approach to rules and laws associated with the ethics of justice. Our society is interworking of people constructed in the pillar of trust. This trust is based on molarity and ethical behaviour. For financial market not only Beliefs is the pillar, it is also a ladder for success. Lose that trust and the individual is going downhill. So financial firms should not only keep code of ethics in paper but also promote self-regulation. For financial market Ethical truthfulness is paramount and clients always come first. Thus, an ethical code of conduct for banking and stock trading would therefore seem to be an obvious requirement.