Sue Parsons, CFA, works full-time as an investment advisor for the Malloy Group, an asset management firm. To help pay for her childrens college expenses, Parsons wants to engage in independent practice in which she would advise individual clients on their portfolios. She would conduct these investment activities only on weekends. Which of the following statements about Standard IV(A), Loyalty to Employer, is most accurate? Standard IV(A): A) precludes Parsons from entering into an independent competitive activity while still employed by Malloy. B) requires Parsons to notify Malloy in writing about her intention to undertake an independent practice. C) requires Parsons to obtain written consent from both Malloy and the persons from whom she undertakes independent practice. D) does not require Parsons to notify Malloy of preparing to undertake independent practice under the current conditions. The correct answer was D) does not require Parsons to notify Malloy of preparing to undertake independent practice under the current conditions. Standard IV(A), Loyalty to Employer, requires that Parsons obtain written consent only from her employer before she undertakes independent practice that could result in compensation or other benefit in competition with Malloy. It is not required to get permission from your employer when only preparing to go into independent practice. I chose B as the answer … but thats incorrect! can anybody explain why…?
I thought you also needed consent if you would be working in a capacity that could be considered competition with your current employer? It sounds to me like her independent practice would compete with the Malloy Group.
You should call up Schweswer and curse at them…
From http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2005.n3.4000 : Page 83 (adobe p95): “Independent Practice. Included in Standard IV(A) is the requirement that members and candidates abstain from independent competitive activity that could conflict with the interests of their employer. Although standard IV(A) does not preclude members or candidates from entering into an independent business while still employed, members and candidates who plan to engage in independent practice for compensation must provide notification to their employer describing the types of service the members or candidates will render to prospective independent clients, the expected duration of the services, and the compensation for the services. Members and candidates should not render services until receiving consent from their employer to all of the terms of the arrangement.”
You need consent to actually practice independently, but you don’t need consent to do planning/preparation.
“Members and candidates should not render services until receiving consent from their employer to all of the terms of the arrangement” Answer is C
Agree with DblA.
Yup, D it is. does not require Parsons to notify Malloy of PREPARING to undertake independent practice under the current conditions.
C states that Malloy and the clients must be notified. I haven’t reviewed Ethics again in a while, but I didn’t see anything that anyone posted here that indicated that the client must be notified. Nimita chose “B”, which is clearly wrong because it states that Parsons must notify Malloy about her INTENTION. An intention is (at best) planning and preparation and does not require consent or notification. I’m with Schweser … D is the best answer.
Couldn’t both B & C be right? I agree with D, not necessary to plan, but C says “persons for whom she undertakes current independent practice” which I think means she needs written consent to actually practice. So I think C and D are both right and in this case due to improper wording not mutually exclusive. I could be being picky, or just flat out wrong, both have happened before. Just throwing it out there to see if anyone agrees or if I’m overruled by the masses.
When you grade exams, CFAI says you must get written permission from your employer.
Black Swan Wrote: ------------------------------------------------------- > Couldn’t both B & C be right? I agree with D, not > necessary to plan, but C says “persons for whom > she undertakes current independent practice” which > I think means she needs written consent to > actually practice. So I think C and D are both > right and in this case due to improper wording not > mutually exclusive. I could be being picky, or > just flat out wrong, both have happened before. > Just throwing it out there to see if anyone agrees > or if I’m overruled by the masses. I don’t think you need to get written consent from your new independent customers. Just your current employer.
I agree with DbIA…the key words in option C are "and the persons from whom she undertakes independent practice. " If this wasn’t part of the sentence, I would say C is correct. I don’t like the question either though.
the schweser answer is correct altho i got it wrong at first, we didnt read the question carefully… she is only “preparing” but not starting to
oh ethics…
@ jabroni - I agree completely with u… that written consent should be taken only from the employer and not from the other party… but since that was not the choice, I chose B instead… But I guess u guys solved my doubt… the question says “wants to start independent practice” I guess once she finally decides to do the same, she may have to take written consent… @black swan - i agree - Oh ethics ! 
Who cannot tell me that the purpose of CFA ethics is not trying not to brainwash us?
olivier Wrote: ------------------------------------------------------- > From > http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2005.n > 3.4000 : > > Page 83 (adobe p95): > “Independent Practice. Included in Standard IV(A) > is the requirement that members > and candidates abstain from independent > competitive activity that could > conflict with the interests of their employer. > Although standard IV(A) does not > preclude members or candidates from entering into > an independent business > while still employed, members and candidates who > plan to engage in independent > practice for compensation must provide > notification to their employer > describing the types of service the members or > candidates will render to prospective > independent clients, the expected duration of the > services, and the compensation > for the services. Members and candidates should > not render services until > receiving consent from their employer to all of > the terms of the arrangement.” Nimita…thanks for putting this up…I had come across this question a few days ago…and had also put B…for the same reasons you did…however we missed the minor details of the “preparing” to undertake independent practice…rather than actually undertaking it… it is vague… from the quote above though…it states that “members and candidates who plan to engage in independent practice for compensation must provide notification to their employer” how is “planning to engage” different from “preparing to undertake”…its’ deceiving… man i hate ethics…
I thot there wer times when you have to get consent from both the employer and the client in onrder to do consulting wokr or sumting isnt it? When does that usually happen? This question confused me regarding the scenario I am talking about…
Sneaky bastards.