Chapter 7

From Principles to a Legal Standard

APPLYING A LEGAL STANDARD TO DEFINE WHAT IS RIGHT AND wrong, rather than an ethical standard higher than the law, helps managers maximize business opportunities, because the law allows for certain practices that a high ethical standard, in particular regarding clients’ interests, would preclude. Any standard above the law restricts opportunities.

At Goldman, my interviews and research made clear, over time, the interpretation of what the “clients’ interests first” principle meant changed from applying a higher ethical standard than that required by law to simply meeting those requirements. The standard changed to as long as one properly disclosed the risks to clients and followed all the legal rules ...

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