When Kamay Met Hill: Organization Ethics in Practice

Abstract

The Kamay and Hill insider trading conviction in Australia highlights many of the issues and problems involved in the prevention, detection and prosecution of insider trading. The case uniquely highlights how ethical behaviour is instilled at home, in school and in society, and the need for ethical responsibility at the personal and organizational level to complement legal rules and enforcement. We use the Kamay and Hill case to explore the reasons behind the failure of the traditional top-down approach to insider trading prevention, where institutional ethical codes of conduct largely reflect and rely upon national rules, norms, and regulation. We propose a bottom-up approach to ensure that individual and organizational behaviour is ethical, where emphasis is not on compliance but on a set of core ethical values that allow individual and corporate expression. It is our strong belief that compliance cannot replace ethics.

Keywords: Abuse of public office; Australia; Ethical norms and values; Ethical standards and codes; Industry standards; Foreign exchange market; FX Global Code; Insider trading; UN Global Compact

JEL Classification: A29, G19, G29, G30, M14, O56