Description : The fifth report in this series focuses on conflicts of interest that arise when a firm combines multiple lines of business, creating multiple interests. Conflicts between research and underwriting in investment banking and between auditing and consulting in accounting firms are investigated, as are the problems that arise from rating agencies providing consulting services and from universal banks combining commercial and investment banking.In the recent stock market collapse, confidence in the financial industry was shaken by numerous scandals. Beginning with Enron in 2001, scandals brought about the demise of prominent financial figures, damaged the reputation of premiere firms and destroyed the global accounting giant Arthur Andersen. Central to this crisis was the exploitation of conflicts of interest. Research analysts at investment banks were found to be distorting information at the behest of underwriting departments eager to promote new issues. Auditors appeared to sanction misleading accounting in order to gain business for the consulting side of their firms. Policy response in the United States was quick. Large fines were levied and regulators compelled the separation of financial security function, constraining financial conglomerates.But are these new regulations and safeguards adequate protection? What costs do they impose on the industry? This fifth title in the ICMP/CEPR series of Geneva Reports on the World Economy examines the problem of conflicts of interest in the financial system. Conflicts of interest lead to a decrease in information that makes it harder for the system to provide savers wit the accurate, essential information that induces them to provide credit to borrowers. This study focuses on conflicts of interest that arise when a firm combines multiple lines of business, creating multiple interests. Conflicts between research and underwriting in investment banking and between auditing and consulting in accounting firms are investigated, as are the problems that arise from rating agencies providing consulting services and from universal banks combining commercial and investment banking.Determining the appropriate remedy for a conflict is a challenge because the elimination of conflicts may also eliminate benefits from economies of scope. This study examines five generic remedies: market discipline, regulation for increased transparency, supervisory oversight, separation of financial activities by function, and socialization of the collection and distribution of information. The authors apply this framework to assess critically the Sarbanes-Oxley Act and the Global Settlement between American regulators and investment banks.
Description : This title examines in a practical manner the complex law and regulations that now exist in the United Kingdom, the United States of America and various other important jurisdictions concerning the concept of conflicts of interest and how the principles have been applied in the financial services industry
Description : The notion of conflict of interest is more relevant today than ever. Ethical sensitivities about the relationship between professionals and those they serve is a source of constant debate. This book sets a new standard for work on this perennial topic, collecting a set of practical essays by top applied ethicists on a wide variety of professions and occupations. Some conflicts of interest arise because a profession takes on many roles while serving one goal; others take on one role but serve multiple goals. Some conflicts are internal to the profession; others (such as family or business connections) are external. The essays in this volume address such diverse conflicts in a comprehensive way, in an attempt to make useful comparisons across professions. Containing fifteen original chapters by noted scholars of applied ethics, this volume systematically explores professions including law, medicine, journalism, engineering, financial services, anthropology, film, physical therapy, and literary criticism. An introductory chapter surveys and contextualizes work on the topic, while the concluding chapter offers us a new way to compare conflicts of interest across professions and occupations. Conflict of Interest in the Professions will be of great practical interest to scholars of applied ethics and law, as well as to professionals in the fields discussed
Description : The European Union is moving towards the full implementation of the Investment Services Directive (ISD). Indeed, in some Member States, further changes to the domestic legal framework to increase competition among financial institutions and markets will complete or complement its implementation. This book includes updated papers written by academics and practitioners from Europe and the United States and presented at the Genoa Seminar on European Investment Markets, held in November 1996. Several papers examine critical aspects of the ISD from a comparative viewpoint, in particular considering the appropriateness of further harmonisation. The regulation of financial exchanges in the new competitive arena and the need for cooperation between supervisors receive special attention. Its evaluation of the economic impact of ISD implementation and consideration of further perspectives makes European Securities Markets one of the first and most comprehensive publications on the ISD implementation. The volume will interest and educate all those involved in European securities and derivatives markets in either a legal or economic capacity, including banking and financial lawyers, financial economists, regulators, exchanges and intermediaries.
Description : News of financial entanglements among biomedical companies and researchers has increasingly called into question the worth and integrity of medical studies, nearly three-fifths of which are funded by industry. This volume assesses the ethical, quantitative, and qualitative questions posed by the current financing of biomedical research. The ten essays collected here reflect the wide range of opinions about perceived financial conflicts of interest in medical studies. The opening section provides an overview of the issue, describing the origins of, and concerns raised by, dubious financial arrangements; explaining how certain common situations intensify problematic funding structures; weighing the risks and benefits of commercialized research funding; and detailing the nature, extent, and consequences of the present relationship among academe, government, and industry in the health sciences. The second section compares how the idea of conflicts of interest differs in biomedical research, legal work, and journalism. It includes a challenging look at the term itself and an argument for managed financial incentives. The final section describes and analyzes the existing regulatory regime, poses questions and directions for future self and external regulation, and provides perspectives from a third-party research company. This considered, balanced discussion will interest scholars of bioethics, public health, and health policy.
Description : Handbook of International Insurance: Between Global Dynamics and Local Contingencies analyzes key trends in the insurance industry in more than 15 important national insurance markets that represent over 90 percent of world insurance premiums. Well-known academics from Europe, the Americas and Asia examine their own national insurance markets, including the competitive structure, product and service innovations, and regulatory developments. The book provides academics and executives with an unprecedented range of information about today’s insurance markets. This book also provides important 'new' information on the evolution of the financial sector worldwide and comprehensive chapters on reinsurance, Lloyd’s of London, alternative risk transfer, South and East Asian insurance markets, and European insurance markets. Setting the stage is an overview chapter by the editors focusing on overall conclusions on globalization.
Description : This book is intended to lay out, in a clear and intuitive as well as comprehensive way, what we know - or think we know - about mergers and acquisitions in the financial services sector. It evaluates their underlying drivers, factual evidence as to whether or not the basic economic concepts and strategic precepts are correct. It looks closely at the managerial dimensions in terms of the efficacy of merger implementation, notably the merger integration process. The focus is on enhancing shareholder value creation and the execution of strategies for the successful management of mergers. It also has a strong public-policy component in this "special" industry where successes can pay dividends and failures can cause serious problems that reach well beyond the financial services industry itself. The financial services sector is about halfway through one of the most dramatic periods of restructuring ever undergone by a major global industry. The impact of the restructuring has carried well beyond shareholders of the firms and involved into the domain of regulation and public policy as well as global competitive performance and economic growth. Financial services are a center of gravity of economic restructuring activity. M&A transactions in the financial sector comprise a surprisingly large share of the value of merger activity worldwide -- including only deals valued in excess of $100 million, during the period 1985-2000 there were approximately 233,700 M&A transactions worldwide in all industries, for a total volume of $15.8 trillion. Of this total, there were 166,200 mergers in the financial services industry (49.7%), valued at $8.5 trillion (54%). In all of restructuring frenzy, the financial sector has probably had far more than its share of strategic transactions that have failed or performed far below potential because of mistakes in basic strategy or mistakes in post-merger integration. It has also had its share of rousing successes. This book considers the key managerial issues, focusing on M&A transactions as a key tool of business strategy - "doing the right thing" to augment shareholder value. But in addition, the degree of integration required and the historic development of integration capabilities on the part of the acquiring firm, disruptions in human resources and firm leadership, cultural issues, timeliness of decision-making and interface management have co-equal importance - "doing it right."
Description : An analysis of available data on pension consultants and plans revealed a statistical association between inadequate disclosure and lower investment returns for ongoing plans, suggesting the possible adverse financial effect of such nondisclosure. The econometric analysis detected lower annual rates of return for those ongoing plans associated with consultants that had failed to disclose significant conflicts of interest. These lower rates ranged from a statistically significant 1.2-1.3 % points over the 2000-04 period. The avg. returns for ongoing plans that used consultants who failed to disclose significant conflicts was 3.2-3.3% for the period. This finding suggests the importance of detecting the presence of conflicts among pension plan consultants. Illus.