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the firm defined in ethical terms states that the corporation as an individual, independent entity which is also responsible in upholding the interest of not only the shareholders of the corporation but serve the interest of other groups who would be affected by the action of the organisation either directly or indirectly. These groups are referred to as the stakeholders of the firm. The theory is one of the most popular and influential theory to emerge from business ethics. (Stark, 1994). There are multiple definitions on the stakeholder theory of the firm, but a few are worth mentioning here with reference to the financial services industry. Although Freemans original idea of a stakeholder focussed on any group or individual who can affect, or is affected by, the achievement of the organizations objectives. To get a situational overview for determining a stakeholder, Evan and Freeman (1993) recommends that there are two basic principles .i.e. principle of corporate rights (it demands that the corporation has the obligation not to violate the rights of others), and the principle of corporate effect (companies are responsible for the effects of their actions on others). From the above two principles we can deduce an apt definition for the stakeholder. A stakeholder of a corporation is an individual or a group which either: is harmed by, or benefits from, the corporation; or whose rights can be violated, or have to be respected by the corporation (Crane & Matten, 2010).

The financial services industry with its penetration in the modern society structure has a very important fucntion to perform ethically for all the stakeholders in the system. The stakeholders in the financial service industry are not only the shareholders, employees but also on the micro level there are the consumers who have an account with the bank, have an insurance policy, have thier life savings in terms of the pension saved in these institutions. Even at the macro level the governments are deeply involved with the working of these institutes and these institutes also have a influence on the economy of a country. So it is crucial to act ethically in the larger interest of the stakeholders The function served by these institutuitions on the micro level as well as the macro level, has a deep impact on all the stratum of the society.

Conclusion

The discussion has been stressing on the importance of ethical behavior for the financial services industry. But yet this sector has been witness to major ethical abuse at E.F.Hutton, Saloman Brothers, Prudential Insurance, Barings Bank which all revealed galring managerial problems. These widely publicised scandals made it clear that the business ethics was abused even at the top management of these firms as they were incremental in covering up the acts of their employees. So if the top management of the firm fail to implement strong ethical practices they enable the rot to spread in the system and encourage various abuse.

‘Sunlight is the best disinfectant’, stated Supreme court Justice Louis Brandies in creating the classic rule of thumb behind public disclosure laws. Transparency of financial market pricing and disclosure of material information should be implemented strictly by the regulators as well as the institutions. Warren Buffet who is a legendary figure in the industry, once stated on the back of the Saloman Brother scandal - “If I hear