Futuregrowth Asset Management - "In investment, I will adhere to this code of ethics..."

When is a gift a bribe? Should investment managers be allowed to trade on their own account? Would you be happy to see your anticipated action appear on the front page of your local newspaper? How do we build an ethical culture in our firms?

These are some of the questions that were asked of a group of 150 investment industry practitioners last week in a series of ethics workshops in Cape Town and Johannesburg. [SUBS: October 20, 2009 at Breakwater Lodge in Cape Town, October 21, 2009 at Mutual Square in Sandton, Johannesburg.]

The intention of the workshops was to explore some of the pervasive ethical dilemmas facing the industry today and to share thoughts around how to deal with them.

Terence Berry, CEO of ASISA Academy and Andrew Canter, CIO of Futuregrowth Asset Management and both board members of the Chartered Financial Analysts (CFA) Society of South Africa jointly presented the sessions and facilitated open – and often – heated debate on a number of topics.

Dealing with questions of ethics is easier said than done. "While it is relatively easy to distinguish between legal and illegal acts”, said Berry, “ethical decisions are often not as clear cut.”

The CFA Institute offers a concise set of ethical standards which can be adopted by individuals and used as a guide for such decisions, “… but it must go beyond the text book,” said Berry.

Canter said it was encouraging to report that very few local CFAs were ever reported for unethical acts or for actions that would besmirch the industry. Canter's advice for anyone involved with the investment and asset management sector was to always keep their “ethical filters” turned on. Very often ethical problems boil down to simple errors of judgment, when you should have asked the right questions.

“There are a variety of factors, ranging from legal to moral, coming to bear to support good ethical practices in South Africa,” said Canter. “Just last week [SUBS: Wednesday 21/10/2009] we saw the successful issuance of a fine for insider trading by the Financial Services Board. These fines are rare, but this highlights the increased policing of markets.”