Journal of Business Ethics 47 (2):165 - 173 (2003)

The Prudent Investor Rule creates a potential ethical dilemma for investment advisors selling over-the-counter financial products issued by their firms. The "opportunity" to defraud investors using complex, over-the-counter derivative securities designed for client-specific risk management is much higher than for exchange traded securities. This paper emphasizes the ethical responsibility held by trustees and their organizations to eliminate potential conflict of interests through internal control and monitoring. Independent evaluations of the performance of investment advisors and independent appraisals of complex over-the-counter securities are important in reducing the risks of conflicts of interest. Recent lessons learned from the corporate ethics crisis and requirements of the 2002 Sarbanes Oxley Act would suggest that conflict of interest must be eliminated with third party validation of derivative pricing. By performing due diligence and validation, the trustee is able to satisfy the requirements under the Prudent Investor Rule.
Keywords Philosophy   Ethics   Business Education   Economic Growth   Management
Categories (categorize this paper)
Reprint years 2004
DOI 10.1023/A:1026049803679
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

PhilArchive copy

Upload a copy of this paper     Check publisher's policy     Papers currently archived: 70,337
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

Add more references

Citations of this work BETA

No citations found.

Add more citations

Similar books and articles


Added to PP index

Total views
46 ( #246,379 of 2,508,101 )

Recent downloads (6 months)
1 ( #416,711 of 2,508,101 )

How can I increase my downloads?


My notes