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Rules, such as "When do you NOT need to disclose gifts/additional compensation to employer?"

My understanding is that if its a small gift from a client (pen, golf shirt), you don’t have to disclose it to your employer. If it’s a large gift like a weekend getaway, you can accept but have to disclose to employer. If it’s any gift (large or small) from a firm you work with, but whose money you don’t manage (such as someone you’re doing research on or underwriting), then you may not accept any type of gift becuase it shows partiality–simply disclosing is not enough.

Also, I understand that allowing a client to pay for airfare/hotel is always prohibited (even if disclosed), and that the analyst has to pay for his own airfare (unless it is to a very remote location).

Is this all true? Any other “rules”? It may be helpful if we compile a list.

Thanks everyone.

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I agree mostly with one. The main idea regarding the last sentence of paragraph one is maintaining independence. There is no strict rule against excepting small gifts for research or underwriting.


Also, I understand that allowing a client to pay for airfare/hotel is always prohibited (even if disclosed), and that the analyst has to pay for his own airfare (unless it is to a very remote location).

I don’t think that’s true. CFA recommends paying for airfare/hotels, but it’s not required.

I thought so too in regards to the air/hotel thing, until I came across Question 6 on Schweser Exam 1 PM. I had put B, that he should obtain permission. But the answer was A, that he should pay for his air and travel expenses. This is how I came up with my “rule.” The explanation from Schweser:

The recommended procedures for compliance with Standard I(B) Independence and Objectivity include the recommendation that analysts on company visits pay their own air and hotel expenses. This can be considered “best practice.”

The question we are talking about says “recommended”. It is recomended to pay yourself in the standard. That is why the answer is A.

So it is recommended to pay for yourself–though you are allowed to have client pay if your employer approves?

Bump

Something to add to. It is recommended to pay for yourself, but there is situations where it is ok. The example comes to mind is, you are an analyst for XYZ company doing a research report on ABC Mining Company. The CEO has invited you to tour the mine, but the only way to get to it is by helicopter. In this case, the expenses and the lack of suitable alternatives makes it ok to let ABC pay for your travel. This example isn’t iron clad, but the point is still there.

would someone be able to distinguish between gifts, and additional comp? It seems like one standard explicity prohibits the acceptance of anything that could impair objectivity, while the other says its okay with written consent?