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What About Investor Ethics?

NEW YORK ( TheStreet) -- In every uncovered cover-up and every whistle blown on a scandal, an irrefutable truth comes to light: someone else knew and was complicit, complacent or corrupt in the misconduct's happening.

We connect the dots to CEOs, their teams, the boards and perhaps regulators or other law officials, but here's the awkward question: What responsibility does the investor have in supporting unethical conduct? Should investors put up with companies that hire "bad characters" as CEOs?

As an example, consider the revolving CEO door at Hewlett-Packard (HPQ). Since 2005, it has seen Fiorina, Hurd, Apotheker and now Whitman, not to mention interims in between those stints -- is HP worthy of investment? Should investors take a "wait and see" attitude? Should investors demand the HP Board be re-constructed? What would be a corporate strategy worthy of ongoing support?

Investors need to consider their role in bad corporate practice and misdeeds.

We usually see stocks take a hit for a short period of time when scandal or strategic missteps occur, but it seldom lasts more than a symbolic few weeks or months.

What would happen if investors went further and demanded immediate removal of all involved, regardless of their title, seniority or other prominence, in order to send a loud and clear message that there is zero tolerance to profits without principles?

But just like any one of us, investors are human and therefore corruptible. And when big financial gains are at stake, even shareholders are willing to look the other way, as long as the numbers look good.

Lest any man boast, let a view in our own mirrors cause outrage, just as we are eager to slam the perpetrator or overlook his misdeeds depending on how much money he's making for us (as well as himself).

Maybe the only way to end, or at least severely dissuade, unethical or illegal conduct is to ensure everyone, including investors assume some culpability in at least aiding and abetting the conduct of bad characters.

I'm not quite sure how to legally accomplish that, but I do know shame and guilt are two very serious repercussions of having done something bad . . . or at least they used to be.

So unless we're only about the numbers too, shame on we investors who think only the CEO or board should be held accountable for supporting unethical business conduct.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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