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AOF Principles of Finance

Lesson 11Ethics in Finance

This lesson introduces students to the importance of ethics in business. They explore principles of ethical business practices and examine the kinds of ethical challenges financial professionals might face. By examining real-world situations, students study and discuss how businesses deal with ethical lapses when they occur, the consequences that can accrue when businesses engage in unethical practices, and how businesses can prevent unethical practices from occurring. Students finish the lesson by writing a business email analyzing a particular ethical dilemma.

Advance Preparation There is no class time devoted to the culminating project during this lesson, but students should

be surveying community members for homework. Consider what you need to do to support students in their surveying efforts (e.g., provide additional blank survey forms, remind students to do their surveying, allow class time for a brief check-in if necessary).

In Class Period 4, students will need computers with Microsoft Word or similar word processing software to write emails (one student per computer).

If students have their own email addresses, have them write their emails in an email program and send them to the CEO of the company they are analyzing. This increases the authenticity of the assignment and helps students become more familiar with the nuances of writing within an email program (rather than in a word processing program).

This lesson is expected to take 4 class periods.

Lesson FrameworkLearning ObjectivesEach student will:

Define ethics, morals, values, and lawfulness Differentiate between legal and moral issues Explain how businesses should respond to ethical problems when they occur* Demonstrate the ability to write an effective professional email

*This is one of the 16 key learning objectives assessed by the NAFTrack Certification end-of-course exam for this course.

Copyright © 2009-2016 NAF. All rights reserved.

AOF Principles of FinanceLesson 11 Ethics in Finance

Academic StandardsThe relevant Common Core State Standards are too extensive to list here but are an important basis for this lesson. For details, please refer to the separate document “Correlations to the Common Core Standards” (available in the Course Planning Tools section of the course materials).

Describe and follow laws, regulations, and ethical standards that affect finance operations and transactions (Common Career Technical Core 2012, FN 8)

Understands the obligations of businesses to the government and the community (McREL Business Education Standards 1999, Standard 33)

Understands the role of ethics in the business world (McREL Business Education Standards1999, Standard 34)

Understands ethical concepts, including integrity and confidentiality, as related to the business environment (McREL Business Education Standards 1999, Standard 35)

Analyze how forms of business ownership, government regulations, and legal regulations affect entrepreneurial ventures (NBEA National Standards for Business Education 2013, Entrepreneurship VIII, Legal)

Examine the role of ethics and social responsibility in decision making (NBEA National Standards for Business Education 2013, Management V, Ethics and Social Responsibility)

AssessmentAssessment Product Means of Assessment

Email response to an ethical scenario (Student Resource 11.7)

Assessment Criteria: Response to an Ethical Scenario (Teacher Resource 11.2)

Prerequisites Understanding of the finance industry, including an ability to identify different financial institutions and

their functions

Instructional Materials Teacher Resources

Teacher Resource 11.1, Presentation and Notes: Effective Business Email (includes separate PowerPoint file)

Teacher Resource 11.2, Assessment Criteria: Response to an Ethical Scenario Teacher Resource 11.3, Key Vocabulary: Ethics in Finance Teacher Resource 11.4, Bibliography: Ethics in Finance

Student Resources Student Resource 11.1, Scenarios: Ethical Dilemmas Student Resource 11.2, Reading: Ethics in Finance

Copyright © 2009-2016 NAF. All rights reserved. 2


Student Resource 11.3, Defining Format: Ethics Terminology Student Resource 11.4, Analyzing: Ethics Scenarios Student Resource 11.5, Planning: Response to an Ethical Scenario Student Resource 11.6, Reading: Effective Business Email Student Resource 11.7, Writing: Response to an Ethical Scenario

Equipment and Supplies Blackboard, whiteboard, or flip chart LCD projector and computer for PowerPoint presentation Computers with Microsoft Word or similar word processing software (one student per computer)

Lesson StepsStep Min. Activity

CLASS PERIOD 1

1 15 Discussion: What Should They Do?Students begin their study of ethics by exploring two real-world ethical dilemmas they might confront in their lives.

When class begins, divide the class into groups of three to four students. Refer students to Student Resource 11.1, Scenarios: Ethical Dilemmas. Read each dilemma aloud as a class. Then assign half of the groups to one scenario and half to the other scenario. Have groups discuss their assigned scenario until they can come to agreement on how to handle the situation.

Allow a few minutes for groups to come to a consensus, then invite volunteers to share what their groups think Sanjay or Portia should do. After one group shares, ask the rest of the class if any other group had a similar response, and allow other groups to respond. Let students debate a bit if opposing opinions come up.

Point out that there are no easy answers for these types of situations. These are what are called ethical dilemmas. Explain to students that in this lesson, they are going to learn more about ethics in finance.

2 35 SQ3R: Ethics in FinanceIn this reading, students read about ethics in finance. Students become aware of the



Step Min. Activity

media’s portrayal of the finance industry as well as some of the reasons why ethical lapses can occur within the industry.

Introduce Student Resource 11.2, Reading: Ethics in Finance, by pointing out the title and the different sections of the reading. If students are unfamiliar with the Survey, Question, Read, Recite, and Review (SQ3R) reading strategy, coach them through the following process.

Survey: Students read the title and headings and speculate about the content. Question: Pairs generate questions about the text before reading it. Each pair

should create two questions. Read: Students read Student Resource 11.2, Reading: Ethics in Finance, and

answer the questions. Recite: Students talk about, reread, highlight, and/or take notes about the key

ideas in the text. Review: Students review the text and summarize their understandings.

Place students into pairs and instruct them to complete the reading using the SQ3R reading strategy. For a detailed explanation of this instructional strategy, please see The NAF Learning Handbook.

After students have completed the activity, ask for volunteers to share some of the main points from the reading and/or their summaries. Instruct students to hold on to the reading and their notes, as they will be using them as a reference in the upcoming class periods.

Students should realize that instances of unethical and immoral behavior in the finance industry are very complex. The finance industry is faced with many internal and external factors that can make behaving ethically a challenge. Although there are many regulations placed on the industry, and businesses within the industry are doing their best to create a culture that reflects high ethical and moral standards, even just a few instances of unethical behavior can undermine the whole industry.

Let students know that in the next class period they will learn more about ethics and morals and about why it can be challenging to stay true to your ethical beliefs in the real world. Also remind students to continue doing their project surveys for homework.

CLASS PERIOD 2

3 20 Defining and Applying Terms: Ethics, Morals, Values, and LawfulnessStudents gain a deeper understanding of the terms ethics, morals, values, and lawfulness.

Post the following terms on the board:

Ethics Morals Values Lawfulness

Ask students:



Step Min. Activity

What do these words mean? What is the difference between ethics and morals? Between values and lawfulness?

Invite volunteers to guess, but reassure students that it is fine to be confused about these terms, because they are often used interchangeably.

Use Student Resource 11.3, Defining Format: Ethics Terminology, to discuss each term with the class. Remind students that this is the Defining Format technique they used earlier in the course.

Explain to the class that, broadly defined, ethics is a set of moral principles and values that is based on the conventions and rules of the society in which one lives. Ethics and behaving ethically are important aspects of life and of business in general, and knowing what society considers acceptable behavior (or right) is extremely important. Help students to recognize that lawfulness relates to whether something is legal, while the other terms refer to ways of behaving that may or may not be directly connected to the law.

To further clarify this distinction, refer back to the two dilemmas students looked at at the start of the previous class period. Read each dilemma aloud to the class. Then ask students:

Which of those dilemmas is about both lawfulness and ethics? Which is solely about ethics?

Students should be able to understand that The Coworker scenario raises both legal and ethical issues because stealing is a crime. The Test scenario is a purely ethical question—cheating on a test does not break the law, but it certainly raises moral and ethical questions. Summarize by reiterating that businesses are more likely to succeed in the long run when they embrace ethical and honest business practices.

4 15 Analyzing: Ethics ScenariosStudents work in small groups to begin analyzing three real-world ethical situations recently faced by actual companies.

Read Student Resource 11.4, Analyzing: Ethics Scenarios, with the class. Make sure that students understand the activity. Assign one scenario to each student. Place students who have been assigned the same scenario into groups of three or four. Give students the rest of the class period to work together and discuss the facets of their assigned ethical scenario. In addition to the questions listed in Student Resource 11.4, groups should also discuss the following question:

Why is the scenario described a breach of ethics? Is it also illegal?

Encourage students to keep thinking about their scenario, as they will use it in the lesson's assignment, which is introduced in the next lesson step.

5 15 Homework: Ethical IssuesStudents begin work on the lesson's assessment product as they continue to analyze the ethical issue in their assigned scenario and begin to plan their response to the company's CEO.

Let students know that they are going to take part in an important task. They are now going to write an email to the CEO of the company discussed in the ethical scenario



Step Min. Activity

they were just analyzing. Students will individually make a recommendation to the CEO about how to address the ethical issue in the company's ethics handbook.

Look over Student Resource 11.5, Planning: Response to an Ethical Scenario, with the class. Explain that students will use this resource to organize the information related to their specific ethical scenario. For homework, they need to complete the subsections of the organizer under the first section, Individual Work. These subsections focus primarily on summarizing and understanding the scenario. Encourage students to do additional research online on the company in their scenario and the specific ethical situation. They should also refer to their notes and readings. Let students know that they will have time in the next class period to dig more deeply into an analysis of the ethical issues.

Emphasize to the class that once they have completed the email, they will also get the opportunity to have their voice be heard by actually sending it directly to the company (or possibly even the CEO)!

CLASS PERIOD 3

6 25 Scenario Analysis: Ethical IssuesIn this activity, students study real-world ethical issues by working in small groups to continue analyzing the behavior and consequences of that behavior described in the scenario they were assigned. This activity also gives students the background to effectively complete the email-writing assignment later in the lesson. It also focuses on the following college and career skills:

Thinking critically and systemically to solve difficult problems Demonstrating teamwork and collaboration

Ask students to take out the work they did for homework on Student Resource 11.5. Then instruct them to form groups of three to four with students who were assigned the same scenario.

Tell students to quickly look over the summaries they wrote for homework. If they find any major discrepancies between their responses, ask them to raise their hand so you can assist them. If the summaries are similar, instruct students to move directly to the Group Work section of the organizer, which helps students to analyze the ethical questions at the heart of their scenario.

Circulate through the room as much as possible to answer questions or to resolve stalemates that may occur. Remind students that they will be writing their email to the CEO as individuals, so it is okay if they don’t entirely agree with their group mates.

Point out to students that they also need to consider whether their scenario is both unethical AND illegal, or legal but unethical. Some of the scenarios make it clear if the behavior violates laws or regulations, but students may need some help in determining the particulars of their scenario.

When the class period is about half over, ask students to start wrapping up their work. If students have not totally completed Student Resource 11.5, they will need to finish their analysis for homework.



Step Min. Activity

Remind students that they will need to send their email to the company's CEO, so in the next activity they will learn more about how to write an appropriate business email.

7 25 Presentation: Effective Business EmailThis activity gives students an in-depth look at how email functions as a communication tool in business. It will give students important guidance as they prepare to write an email for their assignment. It also develops students’ listening and note-taking skills.

To prepare, make notes to guide class discussion using Teacher Resource 11.1, Presentation Notes: Effective Business Email. Have Teacher Resource 11.1, Presentation: Effective Business Email (separate PowerPoint file), ready to show as a full-screen slideshow using an LCD projector.

Before beginning the presentation, ask students to copy the following questions into their notebook:

When is email an appropriate form of business communication? When is email not an appropriate form of business communication? What are the basic guidelines for writing a business email?

You may wish to post these questions on the board or a sheet of chart paper for students to refer to. Ask students to take notes on these questions as they view the presentation.

Present the sideshow. Use the notes you prepared previously and pause whenever appropriate to encourage class discussion.

This presentation is duplicated as Student Resource 11.6, Reading: Effective Business Email. Students can read the presentation, answer the discussion questions in their notebook, and discuss their answers as a class. This resource is also useful for review.

Pause frequently during the presentation to give students time to take notes.

After the presentation, divide the class into pairs or groups of three and have them compare their notes for completeness and accuracy. Invite each pair or triad to share their thoughts and questions.

Remind students that they will be writing a business email during the next class period, and encourage them to ask questions now so they feel prepared for that assignment. Also point out that students should be continuing to do their project surveys for homework.

CLASS PERIOD 4

8 35 Assignment: Writing an EmailStudents complete their assignment by writing their analysis of an ethical situation in an email format. This activity focuses on the following college and career skills:

Demonstrating precision and accuracy in communications



Step Min. Activity

Demonstrating the ability to write effectively

Tell students that this is their opportunity to write an email to a CEO, addressing the ethical scenario they have analyzed during this lesson. Review Student Resource 11.7, Writing: Response to an Ethical Scenario, with the class, making a point to go over the assessment criteria. Answer any questions. Remind students to use all their resources from this lesson, including the following:

Their scenario description (Student Resource 11.4) Their analysis of their scenario (Student Resource 11.5) The reading on business emails (Student Resource 11.6)

Let students know that this is their only class time to work on the email, so they need to use their time wisely. Assign students to computers and let them get to work.

As students work, circulate through the classroom to answer questions and keep students on task. When the period is approximately halfway over, ask students to demonstrate by a show of hands how they’re doing on the assignment. If a large number of students will be unable to finish the assignment in the next 10 minutes, you may wish to skip the final activity in this lesson to give them more class time to work, or you may choose to have them complete their assignment for homework.

When students have completed the assignment, collect the emails and assess them using Teacher Resource 11.2, Assessment Criteria: Response to an Ethical Scenario. After you have assessed the emails, encourage students to actually send their email to the company and/or CEO of the company in their scenario. They can find contact information on each company's website.

9 15 Think, Pair, Share: Determining What’s EthicalIn this activity, students become aware of the challenges behind identifying ethical dilemmas.

Explain to the class that many people feel that right and wrong are subjective and are dependent on individual and cultural values. What’s ethical in France may not be ethical in New Zealand. There are many different dimensions to the ethics issue.

Read the following example to the class:

In Western cultures, the practice of nepotism, or hiring relatives over other more qualified applicants, is considered unethical by most people. In Egypt, it is expected that people will hire their own relatives over other applicants because you can trust your relatives more than you can strangers.

This is but one example of the many cultural differences that vary from country to country and from culture to culture. Next, point out to students that as companies do business beyond their own borders, individual and cultural differences can sometimes make evaluating ethics difficult. Write the following two statements on the board.

Whether something is right or wrong depends on the differences in individual values and cultural diversity.

There are clear and uniform standards of right and wrong by which everyone should be judged.

Have students think about the statements, and then instruct them to individually choose one that best represents their own feelings on the topic. Once students have



Step Min. Activity

made their choice, ask them to pair with a neighbor and share which statement best describes their own feelings. After pairs have discussed their thoughts, invite several to share their reasoning with the class.

Emphasize to the class that although many people feel that evaluating what’s ethical is subjective and relative to the situation at hand, there are also people who believe that there are basic behaviors that are inherently wrong. Explain that students should understand that ethical behavior is sometimes very difficult to categorize. While it’s very clear that murder, for example, is wrong and should not be condoned, during their own careers students may find themselves in situations where matters are not so clear-cut.

Because of differences in cultures and situations, evaluating an individual’s and/or a company’s ethical standards can be tricky. Sometimes there is a lack of clarity in determining what’s right and what’s wrong. What is considered an important ethical standard by one person or one business may not be considered important by another.

Point out that ethics are a part of life in general, not just working in finance. Ask students to think about any ethical issues that may be a part of their project topic and encourage students to keep those issues in mind as they continue working on their project surveys. Remind them that their survey results will be due during the next lesson.

ExtensionsContent Enrichment

Have students read through some sample ethical business conduct guidelines from various companies, such as Boeing’s Ethics and Business Conduct home page at http://www.boeing.com/boeing/companyoffices/aboutus/ethics/index.page. Instruct students to choose a local business (or they may create a fictitious business) and create their own ethical business con-duct guidelines based on the models made by other companies. Have students share their guide-lines with the class.

Instruct students to visit the US Securities and Exchange Commission litigation releases website at http://www.sec.gov/litigation.shtml. Students should go to the Litigation Releases—Federal Court Actions section and choose one or two of the releases to read.

Refer students to the online magazine Business Ethics at http://business-ethics.com/category/business-ethics/case-scenarios/ . Instruct students to read the real-life case study presented in an article and write a response that explains what they would do if they were in a similar situation. After they have written their response, have students compare their own thoughts with those that have been posted by ethics experts.

Have students interview someone in the financial services industry. They should focus their interview questions on the types of ethical challenges and moral dilemmas that are common to that field.

Ask students to review several quotes such as the one listed below by John Mackey, Whole Foods Market co-CEO. Then have them analyze several of the quotes they have found and decide if they agree or disagree with the claims that are being asserted. Encourage students to create their own quote that reflects a business principle to live by. The website listed below offers many different quotes that could be used as examples.


http://business-ethics.com/category/business-ethics/case-scenarios/

http://www.sec.gov/litigation.shtml

http://www.boeing.com/boeing/companyoffices/aboutus/ethics/index.page

http://www.boeing.com/boeing/companyoffices/aboutus/ethics/index.page


o “Business social responsibility should not be coerced; it is a voluntary decision that the entrepreneurial leadership of every company must make on its own.” —John Mackey, co-CEO, Whole Foods Market

o Business Ethics Quotes, www.woopidoo.com/business_quotes/business-ethics.htm

STEM Integration Technology: Encourage students to explore various business ethics blogs and then create their

own blogs on ethics in their school or the community. Examples of blogs can be found at 50 Best Business Ethics Blogs, http://www.onlinembaguide.net/50-best-business-ethics-blogs.

Technology: Have students take an online ethics quiz, such as the one found at Go To Quiz, http://www.gotoquiz.com/the_ultimate_ethics_quiz. Then have students pair up and discuss their results. If they scored medium-low or medium-high on the scale, what situations could they have handled differently (more ethically)? When they encounter similar situations in the future, will their responses change as a result of what they've learned in this lesson? If so, how?

Additional Cross-Curricular Ideas English Language Arts: Instruct students to choose a character from a novel and analyze the

character’s behavior in a particular situation or throughout the novel in general. How do issues of morality and values come into play? What types of moral and ethical dilemmas are presented? Of Mice and Men, The Catcher in the Rye, Night, and Fahrenheit 451 are just a few examples of the many novels that could be used to explore ethical dilemmas.

English Language Arts: Have students write a short narrative in which they describe an ethical dilemma that they have been faced with. Explain to the class that it could have been a personal, social, or professional dilemma. Students will need to describe the dilemma and their response to it in their writing.


http://www.gotoquiz.com/the_ultimate_ethics_quiz

http://www.onlinembaguide.net/50-best-business-ethics-blogs

http://www.woopidoo.com/business_quotes/business-ethics.htm

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