So I’ll keep this as general and high level as possible, but curious on a procedural component of the ethics section from the reading. Let’s say I want to report something I think might be a violation or activity that I think might be going on that could be a violation is that enough to go to the compliance dept directly or should I gather info on it prior to present why I think this way instead of just a finger in the air approach? Essentially the meat and bones here is do I act on intuition and a perceived shortcoming and not do the homework/diligence and just leave that to compliance or do some of the heavy lifting and then go to compliance after? This could also have to do whether I have supervisory responsibilities or not, but any law or ethics whizs out there it would be a interesting discussion point on whether they want us to lowly analysts to let the big boys do the research :).
You are recommended to go to compliance first. But I think I saw the question before and in this case, I would be more of a fan of going to compliance first. Tha would be my logic. Disassociation would be too extreme. Also I would say that “assuming” could be taken as blissful ignorance. Do you see what I mean?
In real life, I don’t consider it my job to police my colleagues, unless I’m their supervisor (or further above them in the ‘chain of command’). And in fact, to do so in any reasonable way, I might (probably would?) have to violate client confidentiality (because if I’m only tangentially aware, I’m probably not directly on that account). So if I see something that looks sketchy enough to question, I go to compliance. And in fact, many companies have anonymous ways to report potential ethical problems (presumably because most people don’t want to be a snitch, especially if it’s unclear if there’s really a problem; and people worry about retaliation). Would a theoretical construct by the CFAI match with what the right answer would be in real life? I don’t know. Might depend on the specific question and the way it was worded. Are you the supervisor? Are you working on the associated accounts or have some other reason to have more information?
All of the above makes sense and I agree “disassociating” oneself would not necessarily be the right move in most cases when you can be proactive. However, in this sense I think my question is more geared towards should you have some personal obligation to gather facts or reasons why you think their to be a violation or is it simply enough to “have a feeling” about something that might not look right to go to compliance first? Very ambiguous territory here, but I would think there has to be at least some level of responsibility to an associate that may have analysts under him or analysts that may have interns et cetera under him to put in just a smidge of due diligence before reasonably bringing it to compliance. Again some of this is personal bias and the standards don’t need to reflect what “should” be right so just a bit of a grey area here it seems.
Might consult with the code of ethics of the organization itself. Or other professional bodies that have adopted best practice in their fields. Check out ACCA’s for example. In general, I think you should consult compliance if you have reasonable suspicions because failure to do so might appear like aiding and/or abetting, esp. if you end up with copies of the dirt on your person/PC. Moreover, you shouldn’t try to investigate as you might tip off the culprit, which may end up getting you a criminal charge.
You’re right. Supervisors have more responsibility to monitor those they supervise. You can’t know everything they do, but you should be aware of what they are doing and have appropriate monitoring procedures in place. That’s why there’s a separate subsection on responsibilities of supervisors. Supervisory and non-supervisory relationship are very different.
Yes exactly Candidcam! So the key here and the spirit of the question is geared towards the procedural component of said “supervisor” and then what entails being considered a “supervisor”. If you are a 3-4th year “sr. analyst” then you aren’t really a supervisor from a management/partner/vp/md perspective, but you may have a an intern or a junior analyst or two report to you. In this case if said junior analyst has a suspicion of some malicious activity does that then mean it’s your responsibility to investigate the accusations or do the standards indicate that you bypass the diligence into the claim and just go straight to compliance? I would think that the senior analyst should, by nature, do some rudimentary fact finding and diligence into the claim before just going straight to compliance. Otherwise, gut/intuition then are relied on more than procedural integrity on both ends. Just my two cents here…
I don’t think they’re mutually exclusive. I would say in your example the senior analyst would not only have a duty to report the issue to compliance, but would also need to take necessary steps to avoid and/or detect future violations. So increased monitoring of the employee in question, disciplinary action, etc.
Yes totally agree Arbguy, but the point here is more procedural in nature. Essentially should the “senior analyst” be required to present findings and facts to compliance of the issue he wants to bring up OR is it enough to just have a suspicion that something may be off without actually doing the necessary homework on the issue to bring a valid case to compliance? I think you could go one of two ways. 1) Junior analyst thinks something is nefarious and you agree that something seems to be optically off then report this “hunch” to compliance or 2) Junior analyst thinks something is nefarious, you investigate the claim further before going to compliance, then report the issue to your supervisor/compliance and make sure the appropriate steps and procedures are followed. The ladder is just a more equitable distribution of responsibility IMO as to not have every “sr. guy” just saying something might be off without taking personal responsibility for the accusation.