Corruption

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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