The Alchemist: Business Ethics

Posted in Money Matters on October 9, 2003

The following is this week’s installment of The Alchemist, a column by Mensan Al Thomas, author of If It Doesn’t Go Up, Don’t Buy It. Click ‘Read More’ below for this week’s article, “Business Ethics.”

The Alchemist: Business Ethics

by Al Thomas


There is much talk today about ethics in business – as
there should be, but there should be more than talk; there should be a
high moral code for all executives who are responsible to both their
customers and their shareholders.


I have been the president and CEO of one publicly owned
company and also was president of another that was responsible to
customers who traded equities. This carries a high responsibility to all
concerned. You have to be more than worried if you do something wrong
because you will go to jail. You must have the desire to try to always
do your best for everyone who works for you as well as all the customers
or investors that deal with your company.


Ethics is supposed to be either black or white, right or
wrong, but today it is many shades of grey. If any company does shady
business you can be sure it starts at the top and filters down because
the president is the one who sets the example for the actions of the
entire company. This is as true for actions of our elected officials as
it is for corporations or individuals. We have had some pretty sorry
examples of that in Washington.


Each time there is a new scandal the public seems less
disturbed. The recent disclosure that mutual funds have been allowing
hedge funds and other large traders to take positions after the closing
bell is a brutal example. Maybe investors are not aware that someone is
writing checks on their account. This is stolen money that is no
different than a guy with a gun holding up a 7-11 store. Yes, the one
difference is that the mutual funds have allowed millions of dollars to
be siphoned off from those to whom they owed a fiduciary relationship.
The fund manager is a crook and deserves jail time. He just took the
money with a click of the computer keyboard and that was his weapon.
White collar crime deserves the same punishment as the guy with a gun.


When you give a brokerage company, a mutual fund or any
financial institution your money you expect, in fact, you demand, that
they treat you fairly within the rules of the industry. When you are
short-changed you should not accept it.


Because of the huge amounts of money available and
accessible to people in the financial industry it is easy to understand
how they can be tempted into criminal actions. That is why all publicly
traded companies are required to have their books audited annually.
Lately we have seen that even these audits are tainted.


Investors rely upon the numbers set before them in order to
make decisions about owning stock in a company. If the information is
dishonest a proper decision cannot be made.


Today we are seeing another type of corporate officer being
created. He is called the Governance Officer. It is his job to see that
the company maintains high ethical standards. I applaud this action and
hope he cannot be seduced by big bucks.


Copyright Albert W. Thomas. All rights reserved. Author of “If It Doesn’t Go Up, Don’t Buy It!” www.mutualfundmagic.com. Comments to al@mutualfundmagic.com.