Hello,
In the indepedepence and objectivity portion of ethics, they explain receiving gifts from clients if ok as long as it is disclosed?
How come receiving gifts from clients is ok, but not receiving gifts from related parties or providing gifts to potential clients for their business?
It really depends on whether the gifts are for past performance or future performance. The former are OK; the latter might not be.
Is the standard different between portfolio management company and a company that provides analysis tools to the porfolio management company?
Basically, I am reading on one of the practice exams is that the company that is providing analysis tools to the PM firm is rewarding the PM firm (all expenses paid trip) due to increase activity in the prior quarter.
However, I am also reading in the same passage that a client rewarding the PM firm is ok because its only a client. But wouldn’t that reward for good performance imply the PM firm would treat this client favorably over other clients?
The question is whether or not the payment could compromise a covered person’s independence, objectivity, or fiduciary duty.
I don’t see how that could be a problem with the analysis tools company and the PM firm.
If the client pays a manager for past performance, that’s clearly OK. If a client pays a manager for future performance, that could be a problem if it causes the manager to forsake his duty to his other clients.