DEFINITION of 'Corruption'

Dishonest behavior by those in positions of power, such as managers or government officials. Corruption can include giving or accepting bribes or inappropriate gifts, double dealing, under-the-table transactions, manipulating elections, diverting funds, laundering money and defrauding investors. One example of corruption in the world of finance would be an investment manager who is actually running a ponzi scheme.

BREAKING DOWN 'Corruption'

To prevent corruption in the financial services industry, Chartered Financial Analysts and other financial professionals are required to adhere to a code of ethics and avoid situations that could create a conflict of interest. Engaging in corrupt behavior could result in job loss and revocation of a professional designation, such as the CFA title. Other penalties for being found guilty of corruption include fines, imprisonment and a damaged reputation.

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