Conflict Of Interest

DEFINITION of 'Conflict Of Interest '

A situation where a professional, or a corporation, has a vested interest which may make them an unreliable source. The interest could be money, status, knowledge or reputation for example. When such a situation arises, the party is usually asked to remove themselves, and it is often legally required of them.

BREAKING DOWN 'Conflict Of Interest '

An example of a conflict of interest would be a board member voting on the induction of lower premiums for companies with fleet vehicles when he is the owner of a tow truck company outside of the corporation. In relation to law, representation by a party with a vested interest in the outcome of the trial would be considered conflict of interest, and the representation would not be allowed.

RELATED TERMS
  1. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
  2. Interlocking Directorates

    A common business practice where a member of a company's board ...
  3. Fiduciary Fraud

    Illegal practices committed by financial institutions and financial ...
  4. Revolving Door

    The movement of high-level employees from public sector jobs ...
  5. Major Fraud Act Of 1988

    A piece of legislation passed during the Reagan administration ...
  6. Stuffing

    The act of selling undesirable securities from the broker-dealer's ...
Related Articles
  1. Investing Basics

    Rise of the Co-Investment in Hedge Funds

    Learn about the rise of co-investment deals among hedge funds. See how these high-risk and high-reward opportunities are becoming more popular.
  2. Markets

    What Investors Can Learn From Insider Trading

    Some insider trading is actually legal - and can be extremely telling for investors.
  3. Economics

    Defining Illegal Insider Trading

    The better you understand why insider trading can be criminal, the better you'll understand how the market works.
  4. Mutual Funds & ETFs

    Why Late Trading Is Illegal

    Institutional investors got a sweet deal that soured retail investors' mutual fund returns.
  5. Options & Futures

    Putting Management Under The Microscope

    We tell you where to find the telltale signs of corporate misdeeds.
  6. Options & Futures

    The Chinese Wall Protects Against Conflicts Of Interest

    After the crash of 1929, this barrier helped define ethical limits, but it did little to prevent fraud.
  7. Entrepreneurship

    Make Sure Your Business Complies with These 3 Environmental Laws

    Discover why 1970 is considered the year of the environment, and learn about several major environmental laws with which businesses must comply.
  8. Investing Basics

    Financial Boiler Rooms Today: Real-World Examples

    High-pressure sales environments pitching inflated penny stocks or faux companies exist and cost investors millions every year. Here are a few examples.
  9. Investing Basics

    High-Pressure Sales Tactics You Should Be Aware Of

    Beware of financial advisors (and others) who use these common high-pressure sales tactics.
  10. Economics

    What's a Memorandum Of Understanding?

    A memorandum of understanding, or an MOU, is a written legal agreement.
RELATED FAQS
  1. Why is fiduciary duty so important?

    Fiduciary duty is one the most important professional obligations. It basically provides a much-needed protection for individuals ... Read Full Answer >>
  2. Are custodians barred from engaging in commercial banking?

    Custodians are financial institutions that maintain the safety of assets deposited with the institutions. Custodians typically ... Read Full Answer >>
  3. Are arm's length transactions always better than transactions not at arm's length?

    Arm's length transactions occur between parties that are strangers, or between entities separate and unique from each other. ... Read Full Answer >>
  4. What are examples of businesses that exhibit social responsibility?

    In the 21st century, companies that exhibit corporate social responsibility are winning high marks from consumers and investors ... Read Full Answer >>
  5. Why is social responsibility important to a business?

    Social responsibility is important to a business because it demonstrates to both consumers and the media that the company ... Read Full Answer >>
  6. Why are business ethics important?

    Several factors play a role in the success of a company that are beyond the scope of financial statements alone. Organizational ... Read Full Answer >>
Hot Definitions
  1. Short Selling

    Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is ...
  2. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  3. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  4. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  5. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  6. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center