Latin American Capital Markets

DEVELOPING CAPITAL MARKETS—ETHICAL ISSUES 419ing values and loyalties invariably at play. And perceiving professional relationshipsfrom an integrated moral perspective sheds light on the practical nature of ethicalanalysis. For example, no capital market is so advanced that the nonoccurrence of insidertrading, unfaithful accounting, or abuse of authority (all departures from usualprofessional standards, good faith, and common decency) can be taken for granted, asrecent scandals have made clear in the United States, Europe, and Japan. 4 Professionalcultures are formed over time, by events big and small that determine how individualagents and groups behave when not being watched. Moreover; whether the behaviorof professionals is close to the ethical expectations of society largely depends on themoral framework of each given community.A Suitable Moral FrameworkThe formation of professional character is a social and moral commitment to buildtrust that requires much more than codes of ethics and tribunals of conduct. Societydelegates to the professions the responsibility to guard their segment of the public interest,with the privileges and benefits that self-government entails; and society revokessuch mandate when negligence, temerity, or disorder become apparentThis retractionmay be implicit in the statutory reforms that enhance accountability standards andmake more rigorous the penalties for noncompliance. Examples abound, and in allcases, the moral commitment required should be understood in its modest sense,that is, not requiring supererogatory behavior that, above and beyond the call of duty,would be expected from heroes and saints rather than from ordinary market agents(Baron 1997).Ethics codes apply to adults who have manifold visions of the world, values,attitudes, habits, ways of processing and interpreting information, prejudices, and, usually,limited formal education in applied ethics (Sembor and Leighninger 1993). Professionalethics training normally restricts itself to discussion of the standards andpractices of the respective professions rather than to the free examination of morecomplex ethical paradigms.There are ethics of principles, ethics of conflicts, and professionalethics, which is a subcategory of the other two. Demand grows by the dayfor business ethics, a kind of applied ethics, to go beyond the questions of institutions4 Smith (1979, bk I, ch. I I) expresses this sentiment when pointing out, "The interest of the dealers ... is never exactlythe same with that of the public, who have generally an interest to deceive and even to oppress the public, andwho accordingly have, upon many occasions, both deceived and oppressed it"Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub