Ethics Question: Banging your secretary in the office?

CFA Institute Chief Departs After Disclosing Relationship Board Replaces CEO After ‘Personal Matter that Represented a Potential Conflict of Interest’ By DANIEL HUANG June 10, 2014 3:15 p.m. ET

CFA Institute, the nonprofit organization that confers one of the most highly regarded credentials for financial professionals, replaced its chief executive last week after its board learned of a relationship between the executive and a senior staff member, said people familiar with the matter.

In March, the group said John Rogers, its CEO for five years, would step down in August, without citing reasons. Last week, it told members in an email that Mr. Rogers had come forward after the announcement of his resignation with a “personal matter that represented a potential conflict of interest.”

Mr. Rogers left the organization June 3, Charles Yang, the institute’s chairman, said in an interview. Mr. Rogers’s departure followed an investigation by board members into his relationship with the senior staff member, said the people with knowledge of the situation.

CFA Institute, in a prepared statement, said “the matter that prompted the board and John Rogers to initiate this transition is a very private one for John.” Mr. Rogers didn’t respond to requests for comment.

While the organization’s code of conduct doesn’t prohibit relationships between staff, a concern on the board was that potential conflicts from the relationship could open CFA Institute to litigation or public criticism, people familiar with the situation said.

The institute is best known for administering the Chartered Financial Analyst exams, a rigorous test of financial analysis and ethics. This year, nearly 150,000 candidates from 179 countries registered to take one of the exams, often after years of study, on June 7. The organization has 119,000 members.

The leadership change is a sensitive topic within the institute, which on its website defines its mission as “promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society.” Mr. Rogers took the helm in January 2009. He was the driving force behind “Future of Finance,” an initiative the group launched in 2013 to promote ethical behavior in the financial industry.

Some members said they were confused by the management shake-up, but didn’t feel it detracted from the value of a CFA certification.

“In this day and age, when these things happen, who’s surprised anymore?” said Dan Lekan, a Chartered Financial Analyst and chief financial officer at Chicago Capital Management, who wasn’t aware of the specific events leading to Mr. Rogers’s departure.

Mr. Rogers has been replaced by interim head Dwight Churchill, the CFA Institute said. Mr. Churchill, who is currently a member of the CFA Institute Research Foundation Board of Trustees, has served on the CFA board, including as chairman from 2002 to 2003.

Mr. Rogers’s compensation totaled $1.4 million in the fiscal year ended Aug. 31, 2013, according to the CFA Institute’s annual proxy statement. In 2011, the latest year for which figures are available, the nonprofit brought in revenue of $231 million.

In the interview, Mr. Yang said he “immediately” took over management duties after Mr. Rogers disclosed the “personal matter” to him on March 28.

Mr. Yang said that shortly after Mr. Rogers disclosed the potential conflict to him, a working group was formed that included Giuseppe Ballocchi, chairman of the board’s audit and risk committee, and members of outside counsel.

The full board was informed on April 27, Mr. Yang said.

“The way the board responded shows our full commitment to ethics and integrity,” Mr. Yang said.

There are a couple of threads on this already.

Well he did disclose the conflict of interest, so that’s good.

If he banged her in the office, that might be "denying your employer the benefits of your services ". However, it’s hard to interpret what that means exactly. It might mean he should have been working rather than getting his funk on, or it might mean that he was supposed to offer everyone at the firm the same.

should he let the emplyer bang her first? priority of transactions

He banged one staff member more than the others? Unfair dealing.

As long as he made the proper adjustments to his balance sheet to make sure she didn’t violate their clean surplus relationship…

lol to the comments above

I guess he went long with company ass-ets.

and created an unfunded liability?

The guy was obviously over-leveraged that day with a high holding period. Then decided to discount his secretary with some cash flow in GAAP.

violation of soft dollar standards: he recceived services that did not benefit all clients, although he could argue that they helped him in his investment decision process. maybe he will cop out by pointing out cheapest execution compared to avg. Charlottesville rates.