Code of Ethics of Goldman Sachs’

TitleThe effectiveness of Goldman Sachs encipher of ethics Date17 October 2012 ToCEO, Lloyd C. Blankfein Introduction The grave of ethicsis adopted by organizations to assist members in understand the difference between right and wrong and in applying that understanding to their decisions. An effective mark of ethics should too help to delineate the proper procedures to determine whether a intrusion of the figure of ethics has occurred and, if so, what remedies should be imposed.After reviewing the federations code of ethics, we found that it has well established the sentiment of avocation ethics and the companys objective, and also several kinds of encouragement to promote the ethical business behavior effectively. The companys code of ethics, however, is non practical enough for implementation as the mental ability is too general and vague, and there atomic number 18 not enough guidelines and regulations to help the ply to detect or solve the ethical issues. What mak es the Code of Ethics Effective According to the code of ethics, the employees argon encouraged to snap off any mess ups or unethical issues in the company.The company has also established a certain department, the b alone-shaped Compliance Division or Legal Department, as the platform for reporting any violation of the code, and it also helps the employees to identify and escalate potential ethical issues. Meanwhile, the company has also set up the Non-Retaliation Policy which purely prohibits the retaliation against anyone who reports in full(a) faith a possible violation of the Code. Under those policies and procedures, the employees will timber easy to voice out if they found something going in the wrong track.What makes the Code of Ethics unable(p) The code of ethics of the company consists a large portion of text about the general code of ethics which is applied to every individual unit, but it emphasis less on the code for investment funds banking industry, such as in sider dealing, money laundering, outside business activities and relationship and other potential conflict of interest, and staffs personal financial affairs. Without any detailed case illustration for each of the particular issues, employees whitethorn feel hard to follow the code.This imposes potential risks for employees to make unethical transactions unknowingly. Moreover, the code does not strictly restrict the actions of personal conflicts of interest but are allowed if approved by the firm that may shock the independence of professed(prenominal). Audit firm banned any conflicts of interest which had been stated clearly on the statement. Auditors, for example, are prohibited to accept any favors which violate the professional. Another weakness of the code is that it omits the implementation and administration policies.There are no content how the company supervises the implementation of the code, what the company do if the code is found to be not effective, how long the comp any reviews the code and so on. Also, the code illustrates that the company take a passive habit on discovering the ethical issues. The code requires employees take their own initiatives to report any unethical issues. However, it is not guaranteed that all employees are going to follow the code. There is a risk of undisclosed misconduct by employees if the company does not investigate in it. Improvement The code of ethics specifically focuses on banking industry.Take Bank of the Statess code as an example. Although it is impossible to define every action that could be reasonably see as a conflict of interest, company also defines several potential conflicts of interest as examples with a brief description so that everyone can have an idea on conflict of interest. In addition, the code has stated employees should conduct their financial affairs responsibly and keep their business expenses in order. The bank is prohibited money laundering and economic sanctions which have also ment ioned in the code. Those are helpful to provide a clear picture to staff on what they should conduct.It is good practice to have the way reporting the misconduct issue, but company is still played as passive role. And also it may be biases if the issue is examined by internal staff from other departments. To be independence, establishing Committees involved external individual or professional to monitor and investigate the misconducts and unethical issues, and the committees may directly notify the Board of Director. Companys code of ethics can be introduced during the orientation. Each new employee may be request to complete a set of ethical questions after the introduction to ensure everyone understand this code.The failure may be requested to attend another ethical course to recap the important sections. One of global investment bank, Greenhill & Co holds information and training sessions to promote compliance with the laws, rules and regulations that affect their business. Concl usion It is appreciated that the company put drift on setting the code of ethics. The above suggestions are given to your kindly consideration as it is good for the company to review the code once again in order to maintain high standardized of integrity.