The Two Opposing Views of Investment Banking Ethics

Abstract

In Chapter 3, we proposed that deontological ethics should be of primary importance in investment banking. We also identified five key questions that should inform ethical decision-making. Two of these, grounded in deontological ethics, are as follows: who are the stakeholders, and what duties are they owed? and what rights are relevant in the situation, and what bearing will they have in making a decision? The high-profile investigation of Goldman Sachs over the marketing of ABACUS, a mortgagebacked security, highlights these two questions. In particular, as the following comments suggest, a key ethical issue in investment banking is what weight should be given to duties to stakeholders relative to a firm’s rights?