Understanding Corporate Ethics: A Primer Presented by: Joshua B. Toas, JD, CCEP, CCEP-I, CFE Chief Compliance Officer

Business Ethics  Billy Madison-Billy wins the decathlon Billy Madison-Billy wins the decathlon 2

Learning Objectives  A conceptual understanding of ethical principles that help guide employees at all levels:  at work  at home  How to identify when things are falling apart  This is not an overview of RF policies governing ethical behavior or conduct 3

Qualities of an Ethical Teammate  Competence to recognize ethical issues and to think through the consequences of alternative resolutions  Self-confidence to seek out different points of view and then to decide what is right at a given time and place, in a particular set of relationships, circumstances, and involved parties  Tough-mindedness. The willingness to make decisions. 4

Ethics Defined A branch of philosophy which is the systemic study of reflective choice, of the standards of right and wrong by which it is to be guided, and of the good towards which it may be ultimately directed. 5

Ethics Defined  The Alamo-There’s right and there’s wrong The Alamo-There’s right and there’s wrong 6

Ethics Defined Ethics is about people and how they act towards one another. Defining conduct in terms of right and wrong. 7

Guiding Principles  Honesty  Transparency  Consistency  Equity  Fairness  Good versus bad  Professionalism  Diligence  Competence  Integrity  Confidentiality  Diversity 8

Act Ethically  “Cowardice asks the question, ‘Is it safe?’ Expediency asks the question, ‘Is it politic?’ Vanity asks the question, ‘Is it popular?’ But, conscience asks the question, ‘Is it right?’ And there comes a time when one must take a position that is neither safe, nor politic, nor popular, but one must take it because one’s conscience tells one that it is right.” – Dr. Martin Luther King Jr. 9

Ethics Program  Organizational leadership must:  Establish and communicate expectations  Lead by example  Understand why good people sometimes act unethically 10

Ethics Program  Everyone must:  Act in the interest of the team and not personal gain  Follow the rules  Maintain personal integrity 11

Code of Ethics/Conduct  Moses-The 10 Commandments Moses-The 10 Commandments 12

Looking for a higher standard  The Company Men-Ethical scrutiny The Company Men-Ethical scrutiny 13

ETHICAL versus LEGAL  True or False:  If an activity is legal, it is by extension ethical?  Is an ethical person:  Dishonest?  Untrustworthy?  Unfair?  Uncaring?  Unprincipled? 14

ETHICAL versus LEGAL  Ethical people  are guided by basic principles not laws  make decisions with the law as the minimum standard 15

Warning Signs of Ethical Collapse  7 signs of ethical collapse:  Pressure to maintain numbers  Fear and silence  Young ‘Uns and Larger-than-life CEO  Weak Board  Conflicts  Innovation like no other  Goodness in some areas makes up for evil in others 16

Pressure to sell, meet quotas, make money  Margin Call-A fire sale Margin Call-A fire sale 17

Young Un’s and Larger than Life CEO  The Social Network-I deserve some recognition The Social Network-I deserve some recognition  In Good Company-You're my new boss In Good Company-You're my new boss  Steve Jobs calls Bill Gates in jOBS-I’ll sue you Steve Jobs calls Bill Gates in jOBS-I’ll sue you 18

Pressure for Numbers – Even when you know it’s wrong  Cadillac Man-Sale at a funeral Cadillac Man-Sale at a funeral  Ask yourself what would your neighbors think? 19

Enforcement and Discipline  Back to School-Academic fraud Back to School-Academic fraud 20

Ethical Dilemmas  Ethical versus Moral 21

Do the ends justify the means?  Fat Man and Little Boy-Stop playing God Fat Man and Little Boy-Stop playing God 22

International Business  Back to School-Thornton talks business Back to School-Thornton talks business 23

 Ethics is knowing the difference between what you have a right to do and what is right to do. Potter Stewart – Former Associate Justice US Supreme Court 24