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Intd670 1103 a-10-schwappach-loren-p3-t1

  1. 1. ECG Code of ConductPresented by: Karen Nelson, Efo Ntchou, Loren Schwappach, Hattie Simmons, and Jamie Ulrich (Project Lead)Colorado Technical University INTD670-1103A-10 Leadership and Ethical Decision-Making Group Project For: Doctor Bryan Forsyth 1
  2. 2. Presentation Overview •Introduction •General Business Conduct •Sales and Marketing Practices •Business Courtesies/Gifts •Conflicts of Interest•Relationships with Client, Suppliers, Influential Parties, and Coworkers •Use of Company, Client, and Supplier Resources •Insider Trading •Other Areas of Compliance •Reporting, Investigating Measures, and Punitive Actions •Questions and Concluding Remarks 2
  3. 3. A Code of Conduct is a set of principles and rules designed to define how employees areexpected to behave. These guidelines were established to govern employees in such a way they embodythe vision of ECG and represent the organization in such a manner that they exhibit trust, honesty,integrity, and good moral strength when dealing with clients. Although the Code of Conduct dictates therules of ECG, as well as penalties for violations, it can only encourage ethical behavior not force it. Employees much show exemplary professionalism in general business transactions. Alarge part of this professionalism means understanding the difference between right and wrong whendealing with clients. The sales and marketing teams need to be mindful they are disclosing accurateinformation regarding the products and services offered by ECG. The object of their job is to highlightthe value of what ECG has to offer, but embellishing it too far can result in clients and potential clientsnot completely understanding what they are purchasing. It can be common practice for gifts to be exchanged all throughout the workenvironment, which can be an excellent way of maintaining strong professional relationships. This willneed to be supervised very carefully so as to be sure no ethical or legal violations occur. Gift giving orreceiving along with the types of relationships that have developed should be monitored for potentialconflicts of interest which could also have implications of further violations. Insider trading accusationsare serious could be a reasonable result of gift giving/receiving, inappropriate relationships, and conflictof interest issues It is vital to the success of ECG professionally and financially that all business conducted on behalf ofthe organization be done so in a highly ethical manner. Employees are the backbone of ECG andrepresent the organization when dealing with clients, suppliers, and business partners. By upholding theprinciples and rules outlined in the ECG Code of Conduct, they can ensure the success of theorganization. 3
  4. 4. ECG Code of Business Conduct details the ethical and legal principlesthat guide ECG and its employees in our work and services. All employees mustbecome familiar with its contents and use it as a guide when they are unsure of whataction to take. ECG employees, officers, and directors will conduct themselves in aconsistent manner with sound business and ethical practices; appearance ofimpropriety to ensure and maintain public confidence in ECG; and ECG decision-making is fair, respectful, independent and impartial. The Ethics Review Committee will be a selected group of executiveswho have a well-established record of showing high ethical standards andprofessional moral fortitude. They will work as a group to define the Code ofConduct. The expectation is that each and every employee of ECG will be heldaccountable in the Code of Conduct in their daily work performance. The guidelinesshould uphold the high ethical standards that clients will expect from theprofessionals employed by ECG. In addition to governing the ethical climate of ECG,the guidelines will have very clear and concise penalties outlined for violations of theCode of Conduct. Each employee and future employees will be required to undergotraining and sign forms documenting this training on ethics and the Code of Conduct. 4
  5. 5. ECG was built on values, reputation and integrity. ECG employees arecommitment in ensuring that we are inventive, engaging and continually striving for excellence.ECG employees are a valuable resource. Providing an atmosphere of valued employeecommunication, responsibility and involvement is strategic to ECG success as well as employeepersonal development and use of individual talents are encouraged. ECG is committed to support the ambitions and growth of our employees as wellas our customers. We are enthusiastic to deliver excellence in everything we do, our work,customer service and financial performance. ECG will be a responsible partner to ourcustomers acting with integrity towards its shareholders, customers, employees, competitorsand others who have the potential to be affected by ECG activities. We, as an organization, aredriven by our customers and what they expect from ECG. ECG is held to the highest standards in its operations and acceptance ofprinciples of good corporate governance. There is a marriage of great values with itsrelationships with its stakeholders and providing timely information on its activities,performance and financial position. Our goal is to continue to deliver our customers withsolutions and products they want and need. We will always deal with our customers in a fairand forthcoming manner and maintain the highest integrity in our deliver. 5
  6. 6. ECG insists on integrity, honesty and fairness in all aspects of its business. Noemployee or officer is permitted to engage in any forms or bribes, personal gifts, favors.Payments are not acceptable in accordance with ECG policies and procedures. ECG strives tocomply with the highest levels of integrity and accountability throughout the company. Allrecords of transactions will be documented accurately and completed in a timely manner inaccordance with ECG accounting principles. In order to maintain ECG valuable reputation, compliance with our qualityprocesses is essential. We will all work together to ensure prompt and consistent actionagainst violations of this code. There are some situations that may be difficult to distinguishthe difference between right from wrong. It is important that we have an approach to addressnew questions or problems. All employees will be expected to comply with the establishedCode of Conduct. Violations will lead to disciplinary actions including dismissal,notwithstanding civil or criminal action that may be taken. In order to promote the reporting of violations of the Business Code of Conduct,we have incorporated a whistleblower policy in order to enable employees to submitcomplaints in an anonymous basis without fear of the complaints reported leading backed tothe reporter along with no disciplinary action taken against them. 6
  7. 7. A code of conduct is a set of rules outlining the expectations of a governing bodyon a particular group and can be defined as a general guideline for performance that enforceskey ethics and severely discourages unethical, immoral, or illegal behavior. ECG employ codesof conduct to ensure members and employees act appropriately in regards to the governingbody. A code of conduct will ensure that all the procedures of ECG are carried out properly. AtECG, a code of conduct can be either an introduction to ECG employee handbook or, in somecases, a completely separate document that is reviewed and signed at the time of hiring. The business of sales and marketing involve the exchange of a good or servicefor money or other type of payment. When consumers seek information about or purchase anitem, they expect the selling party to act with their best interests in mind. Individuals in thesales and marketing industry, according to the Direct Selling Association (DSA), assumeresponsibilities to their customers due to the personal nature of sales interactions. They havestandards of conduct they must promote because society and other organizations expect this,according to the American Marketing Association (AMA). The values expressed in the code ofethics for sales and marketing reflect moral ideals and serves as a guide that is consistent withlegal requirements against which sales and marketing professionals can weigh themselves andothers. 7
  8. 8. The conduct of ECG sales professionals should never purposefully be malicious,deceptive or unlawful. ECG sales person will need to be honest regarding facts about a serviceor products price, quality, performance, value and availability. Customers must be given writtenterms of sales at the time of sale, and the order must be written clearly and legibly. The values represented in the code of ethics for ECG sales person must includehonesty, responsibility, fairness, respect and transparency. ECG sales professional should alwaysbe honest about the products and services offered, as well as honor promises andcommitments made to customers. They are responsible for meeting the needs of customers,protecting private information and acknowledging obligations to stakeholders. ECG salesprofessionals should represent the company products and services in a way that is clear, notmisleading and free from conflicts of interest. Also they should always understand and treatclients fairly regardless of race, gender, religion and so on. In addition, they should disclose risksregarding products or services and their prices. When a consumer makes a complaint, ECG sales professionals should investigatethe claim. If the complaint is about a sales professional, the company should promptlyinvestigate the claim. ECG Sales professionals should always be up to date on laws that apply totheir area of sales and ought to communicate such laws to clients when appropriate.Individuals working in a sales position must always maintain client confidentiality and protectclient privacy at all times per the guidelines set forth by the company they represent and thelaw. 8
  9. 9. ECG must commit to customer satisfaction and honor best practices in themarketing environment. All information on privacy policies and the policies on the transfer ofpersonally identifiable information for marketing purposes should be displayed accurately andnon-discretely for customer awareness. ECG should also deliver products and services asrepresented. ECG employees must clearly, honestly, and accurately represent its products andservices to customers and uphold the terms and conditions of services. They should alsocommunicate in respectful and courteous manner with all clients and potential clients. Allinquiries and complaints should be handled carefully and in a timely manner. Employees shouldalso be mindful of maintaining appropriate security policies and practices to safeguard clientinformation. It is very important that ECG and all employees follow the spirit and later of thelaw as well as the Guidelines. All ads should be clear, honest, and accurate so that the consumer may knowthe exact nature of what is being presented. Photographs, illustrations, artwork, and thesituations they describe should be accurate portrayals and current reproductions of theproducts, services, or other subjects they represent. All marketing contacts should disclose the name of the sponsor and eachpurpose of the contact. No one should make offers or solicitations in the guise of one purposewhen the intent is a different purpose regardless of the marketing channel used. No one shouldmislead a consumer as to who is making any marketing contact or the purpose of such contact.Disparagement of any person or group on grounds addressed by federal or state laws thatprohibit discrimination is unacceptable. 9
  10. 10. Successful businesses have good, loyal, and trusting relationships with theirclients and stakeholders. Ethical behaviors and principles are an integral part of thoserelationships. The two elements give the relationship a pleasant and productive outcome(Zucker, 2009). In this era’s global market and economy, companies conducting business ininternational markets have to be especially diligent, observant, and meticulously cognizant ofthe behaviors and cultures of the companies they do business with. Observing the customsand courtesies is a form of respect and just good business practice. One of those courtesiesmay involve gifts. Our Code of Conduct will outline specific company policy on giving andreceiving gifts from clients and stakeholders. We are governed by strict federal guidelines inthis area and compliance is mandatory. American businesses have been plagued with scandal involving bribery,corporate espionage, and theft. The savings and loan crisis sin the 80’s where billions of dollarsevaporated because of criminal behavior and the Enron scandal that defrauded billions ofdollars from investors are just two examples of unethical behavior on the world stage (Zucker,2009). Because gift giving and receiving is subject to scrutiny for possible conflict of interestviolations, ECG’s Code of Conduct policy will conform to federal, state, and local policyguidelines. 5 USC 7353 establishes guidelines for accepting and receiving gifts. The Titleapplies to government employees and anyone doing business with government employees.Gift giving and receiving is a sign of good will by the giver and the receiver. It is the giver andthe receiver’s intent that is primarily what is often at odds with ethical and moral behaviors. 10
  11. 11. Organizations are required by law to establish policies and guidelines on ethicalbehavior. Verizon’s Code of Conduct on gift giving and receiving provides that the exchange ofgifts promote successful relationships in the workplace and good will. The Code also instructsits employees that even the appearance of influence should be considered before accepting orgiving gifts. If there is a potential for inquiry, the gift should be reported and recorded onVerizon’s books and records. Gift giving and receiving outside the workplace is acceptable among family andfriends at weddings, birthday parties, showers, etc., as long as there is not a connection thatthe gift is company related. Even in those circumstances the gifts must not be frequentoccurrences. The exchange of gifts with government officials carries special rules and federalguidelines. Employees must also follow the provisions of the Foreign Corrupt Policies Act(Verizon, 2008). The Foreign Policies and Corrupt Practices Act was enacted in 1997 to make itillegal for business and organizations to use influence to receive goods and services fromgovernment officials. Specifically briberies including money or gifts of value offered togovernment officials or anyone when the employee has knowledge that the gift will be used tofurther the receipt of goods or services. Since ECG will be doing business in the internationalmarkets, our employees must be mindful of all the laws that govern our foreign relationships. 11
  12. 12. Giving gifts is an excepted business practice to honor customs and courtesies ofthe client you are doing business with. Gifts should be of a nominal value and not violate theethical policies of ECG or federal statutes. There are several details of the law employees needto be aware of before deciding to give a gift to a client or potential client. There are specificlaws that regulate gift giving to and by government officials and employees acting on behalf ofgovernment officials. As we enter into the global market and compete for governmentcontracts we will need to be careful to ensure all our employees are aware and abide by allgovernmental regulations. Generating good will is accepted in small gifts representing our company or thecountry. Expensive gift-giving and receiving could be viewed and considered a form of bribery,which is strictly prohibited by the Federal Gratuity Statute 18 U.S.C. 201(c). (Campos, 2006).This restriction applies to all employees involved with the company doing business with thefederal government. It also applies to previous employees and previous government officialshaving any association with the government contract. If there is a link between the gift or gratuity provided and the service received, aviolation has occurred. Gifts given or received do not include plaques, food, trophies, greetingcards, or other small gifts of little intrinsic value (between $20 and $50) (Campos, 2006). Thereare exceptions to the rule: if you have an established relationship with the government official(family or friend), then your gift giving or receiving is subject to less scrutiny. Employees mustalso be aware that single gifts that fall within the statutory dollar range, still cannot exceed andannual total of $50. Ethical violations are taken seriously by ECG and the federal government.Even the appearance of impropriety and wrongdoing should be avoided. If there is anyquestion of potential violations employees should seek the advice and guidance of theCompliance Officer immediately. 12
  13. 13. Conflicts of interests are generally forbidden or a company’s code of conduct forobvious reasons. In a 2004 article, Brian Sears defines conflict of interest as an action or actionthat keeps employees from making objective decisions about the employee’s performance.Some companies expand their definition and policies to also include the appearance ofconflicts of interests (Sears, 2004). Conflicts and the appearance of conflicts of interest haveethical and legal consequence. Some acts or actions do not constitute criminal behaviorhowever company policies and practices may impose some sort of employee censure orrestrictions. Giving and receiving expensive gifts in situations where the employee’s intent isto influence the actions or decisions of client or potential client would be considered a conflictof interest. For example, accepting an expensive watch from a company that is competing for acontract for services with ECG would be a conflict of interest. Other conflicts may not be asobvious so employees must be careful and knowledgeable of all conflict of interest laws andguidelines indicated in the Code of Conduct. The inappropriate use of office entails using one’soffice in any way to effect goods or services for gain. Employees are also forbidden to use theirposition at ECG for gain if the use is in direct conflict with the Code of Conduct. Commercialtransactions are those purchased from a person or company in which our employee has aninterest, even casual. This conflict of interest is closely related to ethical violations caused bypurchasing services and goods from family members. 13
  14. 14. Another area of conflict is unauthorized outside employment.Employees are allowed to have outside employment if approved by the companyand it does not violate any federal rules. Organizations in today’s societyroutinely contract goods and services from several different resources in order tominimize cost and maximize efficiency (supply chain management). Theconnection between these companies may be limited but even a minorconnection between an ECG employee and a company they have outsideemployment with could constitute grounds for an inquiry due to potential ofconflict of interest. Conflicts of interests or potential conflicts should be reportedimmediately. A Conflict of Interest Form has been developed and is posted onthe company website. Reports can also be anonymous through the ECG feedbackline. ECG has a responsibility to shareholders, customers, and other stakeholdersto act in a professional manner at all times. That responsibility extends to ECGemployees. If there are instances or circumstances where there is a conflict withan ECG policy or the vision of integrity our company stands for, it is incumbentupon all to bring it to the attention of responsible personnel immediately.Conflicts of interests can destroy a company’s reputation as well as the ability toearn the loyalty and trust of clients. Documented violations will be handled inaccordance with ECG Code of Conduct policies. 14
  15. 15. At ECG, employees need to feel that they are being treated fairly and withrespect. Avoiding conflicts is imperative to meeting that goal. Personal conflicts of interests aswell as business and professional conflicts violations may put our company integrity at risk.Personal conflicts of interests are harder to control, but fairly easy to recognize. Workers formrelationships on the job that may extend to their lives outside of ECG. It is those relationshipsthat are the most troublesome; especially, if they are superior/subordinate relationships on thejob. Leadership must discourage familiarity between supervisors and subordinatesoutside of the work environment. That is not to say that supervisors and subordinates cannotsocialize with each other away from the job. Subordinates should not be encouraged to calltheir supervisors by their first names in any setting. It would be too easy and comfortable touse that familiarity in the workplace and that would be a conflict of interest which could causetension and negative feelings in the workplace. Other workers supervised by the sameemployee would quickly develop animosity or feelings that the friendship was used to showfavoritism. The supervisor would lose the trust and loyalty of the employee and the workplacewould become strained. 15
  16. 16. Clients are the most essential asset to ECG success. Without clients,there can be no business. ECG has a deep respect for the client base and strives for acontinuous good working relationship. The foundation of a good client relationship isthe existence, promotion and practice of a sound client relations policy. This policy isa formal promise to our clients representing our commitment to their satisfaction.We are committed to ensuring that all our employees fully understand and our clientrelations policy and protocols and implement all requirements are followed.Company philosophy of ECG is to exceed expectations of our clients every timeperform a job for them. Long term relationships based on proven performance and mutualtrust. ECG values our clients and we value clients who share our concept ofrelationship. Our goal is to provide our clients with a superior level of service, and todo with the utmost regardless for the quality of services. ECG views every clientrelationships as a partnership, and we understand that our success can only come asa result of the success of our clients. We believe in providing a real service to theclient, and are considered a trusted advisor to obtain insight that only comes fromforming a close valued relationship with our clients. 16
  17. 17. Clients continually take inventory of their relationship with us. Theyreview how our employees interact with theirs as a way to determine how much trustand faith they should put in the advice given by our organization. One of the keyelements in maintaining a successful business relationship with them is to listen totheir input. ECG is a separate organization that is being retained by our clients forspecific needs they have, but we don’t have intricate knowledge of what their plansare or how the rest of their organization works. Each client is different and as suchwill have unique business ‘personalities’. Each client should be treated according towho they are individually. By listening to each client and gaining an understanding ofwho they are, we enable them to feel as though they are special. As the relationshipgrows, ECG employees will be able to anticipate client needs which leads to beingable to provide faster services. ECG maintains a high standard of honesty and integrity in all of ourbusiness relationships. Our organizations business purpose is to provide our clientswith a total package. Our clients may not be right all the time, but they always comefirst in our considerations. ECG policy is to provide exceptional service that isresponsive to the needs of each client and ensures long lasting relationships withthem. 17
  18. 18. ECG is committed to make every effort to meet or exceed our client’sexpectation with quality service and attention to detail that exceeds professionalstandards. Due to the nature of our business relationships, ECG employees will gaininsight into how each client organization works. This affords them the ability toanticipate certain needs before they come to pass. Although this can be verybeneficial, it is important to remain impartial to business deals that don’t specificallyinvolve ECG. This would be a point when the lines of the business relationship can getcrossed and possibly leaving the clients feeling violated. ECG should remain focusedon the business at hand and leave the rest for the client to deal with. There is also the potential for employees of ECG and employees of ourclients to develop relationships that extend beyond the work environment. Theserelationships are discouraged but are not illegal so they must be monitored carefullyfor conflict of interest issues. Each ECG employee is responsible for maintaining highmoral and ethical standards even when they are not at work. This is especially true inthe cases involving these types of relationships. In the event of ethical violationsstemming from them, they will be subject to applicable penalties as outline by theECG Code of Conduct as well as any laws that may have been violated. 18
  19. 19. All ECG employees are to display the attributes of integrity, service before self, andexcellence while performing duties on and off duty. To ensure that fair, honest, and accurate practicesare incorporated into the atmosphere at ECG employees are expected to follow the following rules ofconduct. To ensure the best standards are upheld at ECG the information utilized in the following slideswas developed and modeled after the code of conduct utilized for over 10 years at Verizon (Verizon,2010). To begin, leadership, management, and other employees of ECG must always safeguardintangible and tangible property. This includes protecting property of ECG business providers,customers, or co-workers. ECG, business provider, customer, and co-worker property may not be givenaway, loaned, sold, taken, or otherwise disposed of, regardless of value or condition, without specificauthorization and approval. The definition of property includes but is not restricted to, allcommunications, data, and tangible property. Company property and funds consist of anything that represents or has financial valueand must be handled responsibly, honestly, and in accordance with corporate policies. Unauthorized orpersonal use of corporate funds is strictly prohibited. Company credit cards may not be used forpersonal gain and must be used solely for official, authorized business purposes. ECG employee benefits plans and company programs are given as compensation andtherefore must be used honestly and responsibly. All ECG employees may not misrepresent theirbeneficiaries, covered members, health status, or any other facts, to include reasons for absence, inorder to gain benefits which they or others are not entitled to. ECG employees must document and maintain honest and accurate records regardingtheir work time, communications and activities. Leadership, management, and other employees maynot instruct any other employee to fail to report or mislead work times, communications and/oractivities. When submitting work time, communications and activities ECG employees are representingtheir factual and accurate performance metrics. Employees may report any questions about time,communication, and activity reporting, or any concerns about wage accuracy, claims for unaccountedwork time, or improper/erroneous wage errors to ECG’s Human Resources department, the ECG Payrolldepartment or to ECG Ethics and Compliance department. 19
  20. 20. The information and communication systems, including mobile devices and companycomputers are given to employees to accomplish ECG business and are important assets that must besafeguarded by all employees. Employees must protect company data and information from accidentaldestruction, improper alteration, misuse, or unauthorized disclosure. Limited personal use ofcommunications equipment is permissible so long as it is authorized in the department, by uppermanagement, does not interfere with work responsibilities or ECG operations, incur inappropriate costs,violate the law, this Code of Conduct or other ECG policies. Employees must safeguard and protect the security of any user ID, password, socialsecurity number, identification access number, or any other information that is used for any networkapplication, computer or communication device. Only authorized, properly licensed and approvedsoftware is authorized for use on any ECG communication and/or information systems and its use issubject to applicable software owner’s license agreements. ECG employees must comply with allapplicable policies to include this Code of Conduct when altering, using, accessing, acquiring, destroyingor disposing, or communicating on data over a public network. ECG employees may never use corporate systems to employ in unlawful activities, oractivities that violate ECG policies, this Code of Conduct or that result in ECG’s embarrassment orliability. Some examples of inappropriate use of ECG systems include: obscene, offensive,pornographic, harassing or discriminatory content, malicious software or instructions for compromisingthe company’s security, violation of others’ intellectual property rights, large personal files containinggraphic or audio material, games, auction-related materials, or gambling, communications primarilydirected to a group of employees inside the company on behalf of an outside organization,communications on behalf of commercial ventures, and unauthorized mass distributions, chain Letters,pyramid Schemes. 20
  21. 21. ECG operations and divisions must be appropriately secured to protect ECG employeesand customers. This includes and is not limited business plans and strategies, product/servicedevelopment plans, marketing and technical research data, corporate facilities and locations, securityprocedures and protocols, passwords, computer and information systems, network facilities andoperations, and employee and customer personal information. ECG employees must take all precautions necessary to safeguard ECG’s premises andsystems. Employees may not leave sensitive areas unlocked or unattended or visitors unescorted.Employees must request identification from unrecognized employees and wear proper, authorizedidentification badges while on ECG property. All suspicious activity or activity in violation to ECG policyor this code of conduct must be reported promptly to ECG security and the ECG Compliance Office. Intellectual property includes but is not limited to information protected by ECGtrademarks or copyrights, financial information, business practices, protected information, andinformation provide from consulting services rendered to clients by ECG employees. All intellectualproperty created from services rendered to and for ECG must ensure it is identified by or affixed withECG’s trademark, service mark or copy right symbols. If employees are not sure of what protection isappropriate or necessary, or if employees believe disclosure or use by a third party is improperhe/she/they must contact the ECG legal department and inform the ECG Compliance Office. ECG employees must consider and protect the proprietary rights of others by complyingwith all agreements and applicable laws that protect the intellectual property rights of others, includingall ECG business providers, customers, or competitors. Employees may not modify, perform, distribute,or copy third-party copyrighted materials or conduct file sharing of copyrighted materials. 21
  22. 22. When it comes to trading in the stock market, one party is not supposed to have an unfairadvantage over another. Insider trading is a scenario in which someone who has private information from acompany makes a transaction in the stock market to benefit from this information. This is an illegal move,and it can result in stiff penalties for any offenders. Insider trading is a process that involves information not widely available to the public.Insider trading occurs when someone makes an investment decision based on information that is notavailable to the general public. In some cases, the information allows them to profit, in others, avoid a loss. When an individual obtains such information and uses it to his advantage to profit in thestock market, this is considered unfair. The person or entity that completed a transaction with the personwith inside information was at a disadvantage. This other trader did not have access to the sameinformation, and it may have cost him a great deal of money. Depending upon the severity of the case, insider trading penalties generally consist of amonetary penalty and jail time. In recent years, the Securities and Exchange Commission (SEC) has moved toban insider trading violators from serving as an executive at any publicly traded company. 22
  23. 23. ECG Compliance Officer will be responsible for setting forth Policies andProcedures and monitoring adherence to the rules for the preservation of "Price SensitiveInformation", pre-clearing of all designated employees and their dependents trades (directly orthrough respective department heads), monitoring of trades and the implementation of theCode of Conduct under the overall supervision of the Directors. They will also assist all theemployees and Directors in addressing any Clarifications regarding SEBI (Prohibition of InsiderTrading) Regulations, 1992.Protection of Price Sensitive Information:1. ECG’s employees and Directors shall maintain the confidentiality of all Price Sensitive Information. They must not pass on such information directly or indirectly by way of making a recommendation for the purchase or sale of securities.2. Price Sensitive Information is to be handled on a "Need to Know" basis. Price Sensitive Information should be disclosed only to those within ECG, who need the Information to discharge their Duty and whose Possession of such Information will not give rise to a conflict of interest or appearance of misuse of the information.3. ECG must limited access to confidential information.4. The company files containing confidential information shall be kept secure. Computer files must have adequate security measure implemented.5. The employees in the inside area should not communicate any Price Sensitive Information to anyone in Public Area 23
  24. 24. This anti-fraud rule does not apply only to ECG insiders, employees, or executives. Theprohibition also applies ECG associates, family members, and friends or anyone who possesses materialnon-public information at the time of the trade or tip. When irregular trading activity is detected in acompanys stock, the stock exchanges and the SEC scrutinize all transactions made during the suspiciousperiod under review. Once the governments radar is on, it will try to investigate and match securitiestransactions back to ECG personnel to discover any insider trading. Any Director, officer, designated employee who trades in securities or communicatesany information for trading in securities, in contravention of the code of conduct may be penalized andappropriate action may be taken by the company. Director, officer, designated employees of thecompany who violate this code of conduct will also be subject to disciplinary action by the company,which may include wage, salary freeze, suspension, withholding of promotions, etc. According to the law, anyone found liable in a civil case for trading on insideinformation may need to pay the government an amount equal to any profit made or any loss avoidedand may also face a penalty of up to three times this amount. Persons found liable for tipping insideinformation, even if they did not trade themselves, may face a penalty of up to three times the amountof any profit gained or any loss avoided by everyone in the chain of tepees. Individuals can be barredfrom serving again as an executive or a director of a public company and can also face private lawsuits. Individuals who are convicted of insider trading face prison terms (the Sarbanes-OxleyAct increased the maximum length of sentences) and additional fines. In addition, violators are usuallycharged with mail and wire fraud and possibly with tax evasion and obstruction of justice. Corporationsface additional penalties for failure to set up compliance programs and make reasonable efforts toprevent violations under the theory of "controlling person" liability. These penalties are not the onlyconsequence of an insider trading violation and investigation. Publicity and embarrassment alsosurround the investigation, even if it does not result in any formal charges, damage can be done to anorganizations reputation. 24
  25. 25. Maintaining, preparing, and disclosing accurate records is paramount for ECG to maintain the highstandards of honest, excellence, and performance that clients have come to rely upon. Therefore the following standards andpractices are required for all ECG employees and representatives. Version has developed an incredibly long and though list ofguidelines (Verizon, 2010) for its’ employees. The following additional areas of ECG’s Code of Conduct are modeled after theVerizon guidelines. ECG is devoted to providing and maintaining truthful information that completely satisfies all applicablelegal requirements to include the Sarbanes-Oxley Act of 2002, this act (Sarbanes-Oxley Act, 2003) is mandatory to allorganizations large and small. The act protects whistle blowers, requires disclosure of balance sheets, and requires accuraterecord keeping. Employees must develop accurate records that capture the truthful nature of the activities and transactionsthat they record. Employees must resolve discrepancies in any records and make/take appropriate actions to ensure theircorrection. Any employee that learns or suspects a record contains errors or is misleading must promptly inform his/hersupervisor and the ECG Compliance Office, and the business providers or customers if applicable. ECG will not tolerate the inappropriate alteration or falsification of records. It is improper to intentionallytake any action that leads to the creation of misleading or false records, to include activities such as providing incompleteinformation to, or withholding information from someone preparing a record. It is never acceptable to direct anotheremployee to approve or prepare a misleading or false record. Any employee asked to perform such an activity mustimmediately inform the requester and contact the ECG Compliance Office. ECG is committed to facilitating educated investor decisions and to transparency in financial reporting toenhance investors’ knowledge of the company’s business and activities. All disclosures made in public documents and financialreports must be complete, honest, accurate and understandable. ECG employees should be particularly careful about disclosing such information when making proposals orpresentations to business providers, customers, or other third parties. Employees must not selectively disclose any materialregarding ECG, plans, developments, results, financial condition, business operations or securities. Employees must providefull cooperation to internal and outside auditors. Falsifying, misleading, or failing to cooperate with auditors and investigatorswill result in disciplinary action up to and including termination from ECG. Company records must be maintained according to ECG’s Records Management Policy, the Code ofConduct, all other ECG policies, and all applicable laws. If a disparity exists between any of the above the disparity must be 25
  26. 26. Safeguarding of company information is as critical at ECG as it is at any other large corporate business.Therefore the following rules must be practiced and enforced. Employees must protect publicly available information in which ECG or others have intellectual propertyrights, non-public information entrusted to ECG, and non-public information that includes insider information. Employees must protect non-public corporate information by following company procedures and policiesas well as contractual agreements for protecting, retaining, using, identifying, and disclosing of information. Employees are not authorized to release non-public corporate financial data to third parties or the publicunless specifically authorized by the ECG information controller. Employees are not allowed to release non-public information to the internet, third parties, or the publicunless they are specifically authorized to do so by a vice president or above level supervisor, public affairs, and the ECG Policyand Communications Department. ECG employees may only disclose non-public corporate information to other ECG employees with abusiness related, legitimate requirement for the said information. Any ECG employee to receive a subpoena or court order requiring the disclosure of non-public informationmust coordinate their response with ECG’s Legal Department and Security and inform ECG’s Compliance Office. The obligation to protect ECG’s non-public information and intellectual property rights continues even afterthe employee leaves ECG. Employees cannot accept non-public information belonging to third parties unless the disclosing part isauthorized to do so, and ECG has the owner’s written permission according to an agreement approved under ECG’s LegalDepartment. 26
  27. 27. As the leader for providing top quality, expert consulting services around the nationECG consultants may find themselves working and interacting with the Government and theDepartment of Defense. In order to provide the best practices possible ECG employees must follow thefollowing rules of conduct. Employees should consult the Legal Department to identify additional procedures,regulations, and laws that must be followed when dealing with government agencies as customers.There are specific procedures, regulations and laws related to contacts with government officials duringactive government procurements, limitations on contacts, accuracy in billing, entertainment, and giftsthat must be followed. ECG employees must consult the Legal Department to ensure propercompliance and report any perceived or actual violations to the ECG Compliance Office. ECG may receive court orders seeking information about employee communications orabout ECG customers. Employees may neither deny nor confirm to any unauthorized person anyinformation concerning or the existence of a court order, warrant, or subpoena. ECG employees shouldimmediately contact the ECG Legal Department, Security, and the Compliance Office when these typesof inquires or requests are made. Any employee that receives any legal documents to include subpoenas, warrants,summons, court orders, attorney, government, or law enforcement correspondence must forward toand inform the Legal Department of the documents. ECG employees must take all required steps needed to ensure the protection ofnational security and classified information and must coordinate all activities related to this kind ofinformation with Legal and Security Department personnel with appropriate clearances. 27
  28. 28. The Code of Conduct developed by the Ethics Review Committee of ECG isdesigned for the safety and protection of the organization as well as all employees. Violationsshould have appropriate consequences equal to the severity of the crime. The best method forcatching these violations will be through effective reporting methods. It is the responsibility ofthe knowledgeable executives of the Ethics Review Committee to pull from the collective pastexperiences to determine the safest and most reliable reporting methods. The ECG Code of Conduct should address the various methods available foremployees to report potential violations. An ethics violation reporting hotline, website, orample anonymous drop boxes throughout the various office spaces would be highlyrecommended. This allows reporting to be a free action any employee can utilize. Reporting methods should be safe in order to allow employees to not fear harmor reprisal when performing such actions. Certain violations will be considered minor in natureand do not require personnel to have their employment terminated. This means the reportingemployee will have to continue working with these individuals. This will lead to potential tenseor hostile work environments. In order to best prevent this, ECG has incorporate a “whistleblower” policy. ECG will continue to establish reporting sources for anonymity as well as anopen door policy with HR. 28
  29. 29. ECG should have a policy to investigate any reports of misconduct with a non-biased approach. There should be a separate entity for investigative procedures. Such a groupshould involve the compliance officer, legal office representative, security personnel, humanresources, public affairs, and possibly the law enforcement agency responsible for the type ofaccusation. Investigations should be able to handle investigations with discretion andthoroughness to ensure the accusations are true. While all investigations should be handledseriously, it is important to ensure the reports are legitimate prior to causing damage to aperson’s career. If a subordinate is angry with their manager they could play ‘whistle blower’stating they have overheard conversations indicating a potential insider trading violation, thiswould be considered a very serious offense dictating (according to policy) the employeeimmediately place on temporary leave without pay pending the outcome of the investigation.Well now that person is out of a pay check for a while and their reputation is tarnished. Accusations can be investigated carefully without personnel becoming aware ofit initially. These are the first steps that should be conducted. In the event of there actually wasinsider trading going on, it would be best to catch the perpetrator with their ‘hand in the cookiejar’ and the saying goes. This also solidifies the case against them. 29
  30. 30. The Ethics Review Committee is responsible for defining the Code of Conductand ensuring its thoroughness. They should be highly trustworthy professionals capable ofdetermining appropriate punishments for the crime. Legal, human resources, management,and United States law should be taken into account when deciding upon a course of action forECG Code of Conduct violations. There should also be statements in our Code of Conductaddressing how enforcement will occur. Punitive actions should be determined bases on the type of violations that havebeen reported and confirmed. A person who is lazy in their job should not necessarily lose theirjob if it was a onetime incident that didnt cause damage. A person who has been proven guiltyof insider trading should face the full extent of the law. One of the most common ethical violations that happen in the workenvironment is theft. Often time’s people don’t realize something as simple as using a staplefor stapling non-work related documents together would be considered stealing. The stapleswere paid for with company funds and for the purpose of completing company related tasks.Petty thefts that didn’t cause harm or damage to the organization, should have minorimplications such as being written up. Due to the detriment of losing lots of employees quicklyover accusations, certain violations that have major impacts on the organization should havethe most severe corporate punishment of instant termination and security escort off thepremises. 30
  31. 31. Questions & Concluding Remarks Today We Covered ECG’s new Code of Conduct Including: General Business Conduct Sales and Marketing Practices Business Courtesies/Gifts Conflicts of InterestRelationships with Client, Suppliers, Influential Parties, and Coworkers Use of Company, Client, and Supplier Resources Insider Trading Other Areas of Compliance Reporting, Investigating Measures, and Punitive Actions Does Anyone Have Any Questions? 31
  32. 32. ReferencesBermuda Monetary Authority. (2004) General Business Conduct and Practice Code of Conduct. Retrieved from BMA_Conduct_Of_Business_Code.pdfCampos, L.M., Gallatin, J.P. (2009). Hold On A Minute: Gift Giving to Government Officials. Retrieved from of Conduct. (n.d.). Morality Within the Context of Code of Conduct and Ethics. Retrieved from Ethics.htmlJ.P. Morgan Chase & Co. (2011). Service One 2 One – Providing Outstanding Client Service. Retrieved from bank/about-serviceone2one.htmKRBL Limited. (n.d.). Code of Conduct for Prevention of Insider Trading in Securities of the Company. Retrieved from trading.html 32
  33. 33. MacDonald, C. (2008). Creating a Code of Ethics for Your Organization. Retrieved from Marketing Association. (2008). MMA Mobile Marketing Association: Global Code of Conduct. Retrieved from, A.G. (2011). Tips for Great Client Relationships. Retrieved from, H.L. (2004). Instilling a Corporate Culture of Integrity, Ethics and Compliance – Setting the Tone at the Top. Retrieved 23 July from, R. (2011). United States Military Code of Conduct: Military Rules for Prisoners of War. Retrieved from, B. (2004). Conflicts of Interest. Retrieved from 33
  34. 34. Verizon. (2010). Code of Conduct. Retrieved from Property Services image of hands handing keys over). Retrieved from Security Officer). Retrieved from page-main/ehow/images/a05/rq/45/facility-security-officer_- 800x800.jpg(Lips Sealed). Retrieved from http://locksmith- Records). Retrieved from cal-records.jpg(Medical Records). Retrieved from cal-records.jpg(Untitled image of a conflict of interest tug of war). Retrieved from content/uploads/2009/11/conflict-of-interest.jpg 34
  35. 35. (Untitled image of man giving a woman a present). Retrieved from image of a man with several small desks). Retrieved from image of presents). Retrieved from image of two men whispering). Retrieved from jpg 35