Ethics Audit Presentation

8/2/2019 Ethics Audit Presentation

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ETHICS AUDIT

PRESENTED BY ~DEBADARSHI ROY (10DM074)

RAHUL MISHRA (10DM078)

ASHIS KUMAR DAS (10DM079)

ANIMESH GHOSAL (10DM081)

BARCELONA KHUNTIA (10DM082)

ABHIPSA PATTNAYAK (10DM091)

SANJEEV KUMAR (10DM093)







What is Value?

• It is the basic conviction that a specificmode of conduct or end-state of existenceis personally/socially preferable of an

opposite or converse mode of conduct orend state of existence.

• Values are long-lasting beliefs; evaluativestandards that helps us define what is

right or wrong, good or bad in the world.



VALUES @ A GLANCE



Loyalty to the Organization:

• Being motivated yourself-Your ownenthusiasm and commitment is contagious

• Pursuing total integrity as a core value of the organization and central to the

delivery of community policing• Setting challenging, realistic goals and

objectives• Improving the communication process at

all levels is critical• Treating each person as an individual and

recognizing their respective skills



ETHICS AXIS



DISTRIBUTION



ETHICS MODEL



PURPOSE• Identify pertinent ethical issues in their practice settings. What

specific ethical risks do social workers face? Are there ethicalissues that arise in the work that are unique to the client population,

treatment approach, setting, program design, or staffing pattern?

• Review and assess the adequacy of their current practices. Has thepractice setting addressed compelling ethical issues? How adequateare the current practices, policies, and procedures? What issuesneed to be addressed?

• Design a practical strategy to modify current practices as needed.What steps does the agency or practice need to take to protectclients, prevent disgruntled parties from filing ethics complaintswith state licensing boards and professional organizations, andprevent ethics-related lawsuits? Who in the practice or agencyshould work to address these issues? What resources will theyneed? What timetable should they follow?

• Monitor the implementation of this quality assurance strategy. Howcan practitioners ensure that the implementation plan has beenimplemented effectively? What indicators can staff members use toassess the extent to which the audit goals have been met?



STEPS FOR ETHICS AUDIT

Appoint staff members

Identify ethics related issues

Collect information regarding issue

Identify the risk level

Utilize the findings by taking necessarysteps

Identify a staff to monitor the

implementationDocument the complete audit process



What is Mutual Fund ?

A Mutual Fund is a trust that poolsthe savings of a number of investors who share a commonfinancial goal. The money thuscollected is then invested in capital

market instruments such as shares,debentures and other securities.The income earned through theseinvestments and the capitalappreciation realized are shared byits unit holders in proportion to thenumber of units owned by them.



How mutual fund works:



Brief History of Mutual Fund

First Phase – 1964-87

Second Phase – 1987-1993 (Entry of Public Sector Funds)

Third Phase – 1993-2003 (Entry of Private Sector Funds)

Fourth Phase – since February 2003



F i t it



Frau s associate witMutual Fund

• Churning \ Excessive trading: Churning refers to the excessive

buying and selling of securities by a broker for the purpose of generating commissions and or fees and without regard to

investors’ investment objectives.

• Fraudulent Material Misrepresentation : The broker falsified

fact(s) about an investment. If investor had known the truth

he would not have agreed to purchase the investment.

• Front Running: A stock broker buys or sells securities for their

own account before executing orders previously submitted by

their customers. After the broker has filled his client’s orders,

the broker closes out their position at a profit based on the

new price level created the buying or selling of the clients

orders.



• Fraudulent Material Omissions: The broker failed to inform

you of facts concerning an investment. If you had known

these facts you would not have agreed to purchase the

investment.• Unsuitable Recommendations: Brokers have an obligation

to learn their client’s financial needs, objectives and

circumstances before recommending an

investment. Unsuitable recommendations occur when thebroker recommends an investment inconsistent with the

client’s financial needs, circumstances and objectives.

• Failure to Follow Instructions: The broker is instructed to

buy or sell a security or follow a particular investment

strategy. The broker ignores the instructions and does

nothing or buys something else entirely.



• Unauthorized Trading: The broker buys or sells

securities without written or verbal permission.

Mutual Fund Abuses including, Mutual fundchurning, Mutual Fund switching and Break point

Selling.

• Fraudulent Asset Transfers: A brokerage firm

operates under one name and incurs significantdebts, liabilities and lawsuits. When the firm reaches

a point they have to liquidate assets to pay their

liabilities they close their doors and transfer the

assets to a newly created firm with a different

name. Both firms will have the same employees and

principals.



• Break Point Selling: Mutual fund fraud arises whenbrokers, in order to maximize their commissions,recommend fund purchases at just below the break point

or fail to recommend a suitable share class given thelength of time a client anticipates holding the fund or sellsa share class that is inconsistent with the client’s objectives. Unscrupulous brokers maximize theircommissions by failing to inform the client of the variousmethods commissions and expenses can be reduced.

• Negligence: Broker’s have a duty of care to be reasonablydiligent and prudent in the handling of clientaccounts Negligence occurs when the broker failed in his

duty to be reasonably diligent or prudent and did not actas a reasonable and prudent broker would have acted inthe same situation.



Aftermath of being unethical

CRB Group of Companies :1996 scam known as

CRB scam: Chain Roop Bhansali was charged

with Fraud, Cheating and Siphoning off of funds

from SBI.

Amount of Fraud:

` 12 Billion



AMFI

• Association of mutual fund in India wasestablished on 22 august 1995.

• It is the apex body of all assetmanagement companies which are

registered with SEBI.• It follows the principle of both protecting

and promoting the interest of mutualfunds as well as their unit holders.



OBJECTIVE OF AMFI• It maintains high professional and ethical

standard.• It sets the code of conduct• Interacts with SEBI and work according to

SEBI guidelines

• It develops a trained agent distributor• It promotes proper understanding of

mutual funds• It disseminate information on mutual fund

industry



CODE OF ETHICS BY AMFI

• Integrity (honesty)• Due diligence• Disclosure

• Professional selling practices• Investment practices• Operations• Reporting practices

• Unfair competition• Observance of statutes, rules and

regulation• enforcement



• Net worth of ` 7,911 crore

• It sponsored by Kotak Mahindra bank ltd.

• Employs around 20,000 employees

• Has a distribution network of 1,716branches, in India and Abroad.

• Has over 10 Lac investors in various

schemes



Cases

• Case 01• Kotak Mutual fund ,Somajiguda Branch –

have wrongly issued statement ( SavingA/c No 05520110010797. Investment a/c

no. 502496, CRN no. 11919591).

• Case 02

• KOTAK Mutual FUND/KOTAK MIDCAP – Regarding non credit of amount.



HDFC Asset Management Company Ltd (AMC) was

incorporated under the Companies Act, 1956, on

December 10, 1999.

Average Asset under Management:`

93,105.58 Crs.No. of investors: 41,98,994

No. of ARN certified distributors - 32,570

(As on Sep 30,2010)

Market share 11.8%

No of complaints received 7763 (in 2009).



HDFC Mutual FundCase-1

Front Running Case

• Loss to HDFC mutual fund customers `2.38cr

• Nilesh Kapadia (Ass. Vice President) revealed advanced

information to other market participants

Case - 2

Redemption delayed

• Mr Mitesh Sampat give the redemption request on 2nd Jan,2009

• HDFC Mutual Fund does not want to compensate him for

delayed payment



• UTI Mutual Fund started in January 14,2003 .

• It has a nationwide network consisting

148 UTI Financial Centres (UFCs)• UTIAMC presently manages a corpus of

over ` 65,38,724.42 lakhs as on 31st

December 2010 (source:www.amfiindia.com)

http://www.amfiindia.com/

http://www.amfiindia.com/



UTI Mutual Fund

Cases:

• A person named as Tulika Saikia,Mumbai.

He had applied for redemption of all units for his UTI Growth and ValueFund on 21st January, 2008.

Till April his redemption was not made.



• According to economic bureau report onDec. 2010, SEBI is upset over thecomplaints against some of the leading

mutual fund players.• According to Amfi records, 39 mutual

fund houses have more than 4.5 lakhcomplaints against them.

• UTI Mutual Fund, tops the list with99,347 such issues. The country'soldest fund house has received more

than 30,900 complaints (22 per cent of the total)relating to non-receipt of dividends and another 16,700 markingnon-receipt of statement of accounts





CORPORATE SOCIALRESPONSIBILITY

Kotak Mahindra views Corporate Social Responsibility as an investment in society and in itsown future. Kotak uses the power of its human and financial capital to help in transforming communities

into vibrant, desirable places for people to live. Thegroup leverages its core competencies in threeareas:

• Sustainability

• Economic Development

• Doing My Bit



Awards

• Outlook Money NDTV Profit Awards, 2009

• ICRA Awards, 2006 & 2009

• NDTV Awards, 2006

• LIPPER FUND Awards, 2006

• CRISIL BEST FUND Award 2003

• OUTLOOK MONEY BEST WEALTH CREATOR

DEBT 2003



C i l



Corporate socialresponsibility

• ‘ensuring children learn’ and the ‘girl child’ projects, the bank has assisted in setting up a learning resource

center ‘LRC’ at a shelter home for street boys.

• The LRC houses a bank of materials,

books, teaching and learning aidsand aims to help expand the skill sets of underprivileged students.



HDFC Mutual Fund to launchcancer fund of `10 crore

• HDFC Mutual Fund, the country's second largest fund house by assets under management, with active participation from Indian Cancer Society (ICS) and some noted oncologists in the city, will launch a 3-year close-ended debt fund, christened HDFC Debt Fund for Cancer Cure

• The initial corpus will be invested into low-risk debt instruments in such a way that the initial capital will be fully protected.

• The dividend income that it would generate over its3-year tenure, could be passed on to ICS, where aboard of trustees will decide how to spend that

money to help those cancer patients who need themthe most.• Investors will have the option to either donate the

full dividend or half of it, and at the initial investment will be returned to them at the end of the third year.



AWARDS• HDFC Mutual Fund was the Winner of "India

Equity Fund House" Award (from amongst 9 fundhouses) for the one year period ending December31, 2009 at the Morningstar Fund Awards (India)

2009.• HDFC Cash Management Fund - TreasuryAdvantage Plan - Growth Option was the runnerup in the India Open-Ended Ultrashort Bondcategory (from amongst 28 schemes) for the one

year period ending December 31, 2009 atMorningstar Fund Awards (India) 2009.

• Prashant Jain of HDFC won the award for the bestequity fund manager





CORPORATE SOCIAL RESPONSIBILITY

•One in every 6 people over the age of 60 in theworld lives in India.

•The aged of today have no choice but to

depend on their own lifetime savings to survivefor nearly 20 years if they stop working at age60.

•We are likely to have nearly 20 crore elderly inIndia within the next 2 decades.

•Of the 36 crore paid workers in India today,only 11% belong to the organised sector.

Details of Micropension



Details of MicropensionInitiative

Arrangement with:

• Union Bank of India,

• The Bihar State Co-operative Milk

Producers’ Federation Ltd.(COMPFED),Paradeep Port and Dock Mazdoor Union,

• Bank of India,

• Shree Mahila Sewa Sahakari Bank Ltd.and

• Self-Help Promotion for Health and Rural Development (SHEPHERD)



'Swatantra'

• UTI Mutual Fund announced their tie-upwith HDFC Bank for its InvestorEducation Initiative called "Swatantra" inthe states of Kerala, Karnataka andTamil Nadu.

• This initiative aims at creating investorawareness about different financialproducts and wealth creation options.

• Innovative formats will be used forcommunicating about financial productslike mobile banking, web campaigns,face book, twitter, financial calculatorsand planners.

AWARDS



AWARDS• Second time in a row, UTI Mutual Fund has been

awarded the „Most Investor-Friendly Fund House of the Year‟ by CNBC-TV18-CRISIL Mutual Fund Awards

2011.• Mr Jaideep Bhattacharya, Chief Marketing Officer, UTI

AMC 's CMO has won “MYKM Stars of Industry YouthIcon Award” from 94.3 Radio FM.

• UTI Dividend Yield Fund has been adjudged the TheBest Large Cap Fund by Morningstar Fund Awards(India) -2011.

• UTI Equity Fund has been adjudged The runner-up forthe Best Large Cap Fund by Morningstar Fund Awards(India)-2011.

• UTI AMC has won the Golden Peacock InnovationAward 2011 for its Investor Education initiative „Swatantra‟.



Suggestion:

• Technology

• To have an Ombudsman for Investors‟ grievances

• Regulators should do an audit at regularinterval to check the source of AUM





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Ethics Audit Presentation

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