Ethical Challenges in Financial Sector: An Analysis of Current Financial Scams and Role of Ethics in Avoiding them

At the present time the field of finance ethics is barely formed.Although standard business ethics courses give some attention to ethical issues in finance, few finance departments include a treatment of  ethics. Interest in finance ethics is growing , however and many people in finance believe that ethics should receive some attention in finance education.The this study aims to analyze the current Indian scenario with reference to ethical behavior in particularly and also the key ethical challenges faced by financial sector including the lessons learnt so far

Major financial scam in India

security scam and financial scandals have led to the manipulate of large amount of money. bloating stock markets and sensex. even the financial markets having regulatory authority and empowered legal actions have failed in providing good corporate governance to some extent.

following paragraph describe some of the leading financial scams in India which have affected large population of investors and huge sums of money.

2G Spectrum Scam

Former Telecom minister A Raja is the prime accused who is considered to be the mastermind in this scam by CBI. He  stands accused of under-valuing spectrum as the country's Telecom Minister  and selling it to companies he favored though they were largely ineligible for licenses to run mobile networks. the loss to the national exchequer is pagged by the government auditor at the mind-boggling Rs 1.76 lakh crore 

Satyam case

Mr. Ramalinga Raju  the former chairmen and chief executive of Satyam computer services admitted to falsification in the company accounts and various other irregularities. The estimated fraud was Rs 700 crore billion. Coming on the back of the global recession, this incident  busts the Indian outsourcing Industry and the stock market.

IPO Scam

A number of key operators including corporate stock broker such as Karvy and Indiabulls were involved  in the IPO scam during 2004-2005 The modus operandi of the scam was that the operators  opened thousands of fake accounts to purchase shares in IPOs in the hope of selling later at huge Roopalben panchal  of Indiabulls securities is allegedly the mastermind of the scam.The income -Tax Department in Ahmedabad has found tha two major accused Panchal and Sugandh Investments have together made Rs 60.62 crore in 18 months.

Securities Scam

Ketan Parekh a Mumbai based stock broker and a qualified chartered accountant had large borrowings from global  Trust Trust bank during merger with United Trust of India Bank. He got a loan of  about Rs.250 crores from Global Trust Bank's Chairman MR. Ramesh Gelli The prices of the selective shares constantly increased due to rigging. The investors who bought the share at the higher  prices of the stocks came down to the fraction of the value they were purchased.The investors lost heavily. Even the banks faced a tremendous loss. The amount involved in this scam was estimated to be around 1500 crores 

Corporate governance and ethics

corporate governance involves a set of relationship between a company's management its board  its shareholder and other  it provides  the structure  through which the objective of the company are set the means  of attaining the those objectives and monitoring performance are determined the presence  an effective corporate governance system within an individual company and across and economy as a whole helps to provide  a degree of confidence that is necessary for the proper functioning of a market economy

 Guiding principles for being ethical or not

it can clearly observed that one of the major reasons lapses in the financial sector is greed of  mankind this greed becomes an accumulation fever if you accumulate for the sake of accumulation it becomes the end by itself and if accumulation becomes the end there is no place to stop so the moral of the story is that we should never allow the self interest turn into greed and selfishness.

source www.businessinsider.com