Business, Legal & Accounting Glossary
n. a situation in which a person has a duty to more than one person or organization, but cannot do justice to the actual or potentially adverse interests of both parties. This includes when an individual’s personal interests or concerns are inconsistent with the best for a customer, or when a public official’s personal interests are contrary to his/her loyalty to public business. An attorney, an accountant, a business adviser or realtor cannot represent two parties in a dispute and must avoid even the appearance of conflict. He/she may not join with a client in business without making full disclosure of his/her potential conflicts, he/she must avoid commingling funds with the client, and never, never take a position adverse to the customer.
A conflict of interest is a situation when a firm or agent benefits from both sides of an issue, or in investing is hired by an individual to represent his best interests but works for or has a business relationship with the other side of the issue.
Common conflicts encountered in investing include-
Efforts are made to limit such conflicts and many are mentioned in news reports, but enforcement seems lax or inconsistent. Investors must watch out for their own best interests.
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This glossary post was last updated: 4th August, 2021 | 4 Views.