WEALTH MANAGEMENT CRISIS AT UBS
Prompt: Using the Case Wealth Management Crisis at UBS, develop the Background section of your incident analysis. The background provides a concise overview of the legal and ethical environment in which the case Company Operates.
The case of Wealth Management Crisis at UBS describes the difficulties experienced by UBS after an investigation conducted by the U.S. Department of Justice (DOJ). A research conducted by DOJ for Tax Froud claimed that UBS had assisted fifty-two thousand residents in the U.S. to hide the massive amount of dollars in the form of untaxed assets that were found in secret Swiss accounts from 200 to 2007. The UBS claimed that this act made U.S. treasury to undergo considerable losses in terms of taxes.
Part A
How does this case fit within the broader context of business ethics?
The wealth management case matches excellently towards the broader setting of business ethics. This is because the investment bankers working with the wealth management corporate were willing to violate the business ethics to generate more profits for the wealth management business. The case indicates that UBS senior managers engaged in high-risk activities in order to gain higher bonuses and profits from the Company (Pérez, Martínez & Del Bosque, 2013). Their greed led to most of them losing their job, which to some extent led to the imprisonment of some of the senior managers. Information deduced from both the external and internal sources indicates that most of the people who had invested with the bank ended up encountering massive losses to their ignorant and negligence to follow the ethical guidelines and legal regulations vital for running the businesses. Hence, this is a good indication that there is a need to the companies and its employees to strictly observe ethical guidelines that are vital in establishing an ethical and legal environment for the operation of business activities. Also, the results deduced from the wealth management case suggest that it is essential for the stakeholders and managers to refrain from engaging themselves in unethical activities in the business to earn more profits (Pérez, Martínez & Del Bosque, 2013). This is because unethical activities in the business lead to huge costs and losses. For instance, in case of the UBS company, unethical actions in the business by the bankers lead to the decrease in the public trust, public lost their trust with business due to the unethical activities that were conducted by senior managers in the investment banks.
PART B
Major Industry and statutory framework
Banking statutory and industry frameworks can be related to the case of wealth management. It is vital to have an increased restriction on banking services and operations. For instance, various statutory rules such as SOX (Sarbanes-Oxley Act) and SEC (Securities and Exchange Commission) plays a significant role in enhancing compliance and transparency of the investment banking companies with the laws and rules necessary to run activities of the businesses (Bagley, 2015). For instance, SOX demands that companies must establish appropriate internal control to raise the overall accountability in the organization.
Additionally, effectively cooperate governance frameworks are suitable to enhance long-term sustainability and success of various operations conducted by the banks. Also, international oversight organizations (both the internal and domestic bodies) such as FED (Federal Reserve System), international and domestic bodies such as IMF (International Monetary Fund) and the world bank have a responsibility of ensuring that banking organizations carry to out their operations within appropriate laws (Bagley, 2015). Such bodies are vital in ensuring that there are top-notch accountability and long-term sustainability within the banking sectors.
References
Bagley, C. E. (2015). Managers and the legal environment: Strategies for the 21st century. Boston, MA: Cengage Learning.
Pérez, A., Martínez, P., & Del Bosque, I. R. (2013). The development of a stakeholder-based scale for measuring corporate social responsibility in the banking industry. Service Business, 7(3), 459-481.