Most U.S. investment management firms have formal ethics policies in place, but there still are problems with implementation.
A recent study by PricewaterhouseCoopers LLP, indicated almost 94% of money managers have some form of ethics and professional conduct policy in place, while 50% of the 65 responding firms said they did not have an assessment process in place.
Two-thirds of firms with more than $50 billion in assets under management said they have formal assessment programs, while only 40% of the firms with less than $10 billion of assets under management have such programs.
"Plan sponsors are more concerned with ethics, in addition to performance," said Andrew Nolan, managing partner of the regulatory compliance consulting group at PricewaterhouseCoopers in New York.
The most common way for investment firms to find out rules have been broken -- reported by 81% of those surveyed -- is through an internal audit or through the compliance/legal department, with only 28% of managers reporting wrong-doing was discovered because of a client complaint.
A total of 44% said ethics violations were discovered during regulatory inspections.
The most worrisome violations for money managers are fraudulent financial reporting, misleading advertising of performance figures and insider trading.
Almost 70% of firms surveyed indicated professional designations or certifications reduce the likelihood of employees breaking the rules.