Open discusions on ethics

Hello,

For those early birds who already started prep for level III…I am doing some recap on ethics and decided to open a new post/subforum with the aim to master topics on ethics throughout the year. So here it goes the first one, it refers to standard III (D) - Duties to clients, preservation of confidentiality; example 2 from the curriculum, Lynn Moody who is advisor for a wealthy customer willing to donate a sum to a charitable organization is also treasurer of the Home for Indigent Widows (HIW), which is in search to expand its list of prospects. She fails to comply with the standard because reveals to the president of HIW the contact of that wealthy customer. But the point is, would had it been a violation if she had told the customer to directly contact the HIW instead?

To my knowledge, no, it would not be a violation. Thinking about it, what standard would she be in violation of? No standard comes to mind.

As long as Moody (as if that’s her real name!) makes it clear that she’s affiliated with HIW, it wouldn’t be a violation. If she fails to disclose her affiliation, I would consider it a violation. However, I cannot say for certain that CFA Institute would. I think that they would, but I’m not certain.

I’d e-mail them and ask. My experience is that they’re very helpful and responsive in these matters.

Reading this, I’m happier and happier that I passed and I don’t have to make a judgement on these obscure ethical cases. Hopefully. Ever.

A – if you’ll pardon the expression – men!

(Note, by the way, that judgment has only one “e”.)

Thanks for the spelling correction.

Indeed, lighthearted as I might feel due to the release of the ethics pressure, passing the CFA exams should not mean that from now on I can afford to be ignorant of grammar.

Damn right!

Thank you all guys! and here’s another one (lol);

A portfolio manager supervising a team of 10 members plans to establish his own business in two weeks. But prior to effectively do so, asks his team members who would be joining him in his new adventure. Is that a violation of any standard?

Yup.

Duh!

Make sure you understand the standard “additional compensation arrangements”. It has to do with employers. And depending on how the question is worded can easily be used in the wrong context.

If your employer gives you additional compensation for funneling clients into a particular mutual fund, you are not violating this standard but may be violating others. But it’s easy to pick this answer choice because it makes the most logical sense.

I’d advise you to forget about ethics until next year. Waste of time and energy at this point. The little details you need to remember have very little logic to them so I’d save ethics for the last month.

Wise words from a wise man

Hi,

Thanks for the advice but I like to get to the core of the concepts by seeing multiple different cases…and that requires time. Anyway, the answer to the question is NO, it’s not a violation of any standard, as candidates and members can do any preparations/arrangements prior to leaving the employer. And it seems asking the team crew is considered that, making preparations. A bit weird from my point of view as it conflicts with loyalty to employer but…

Hi,

Here are some additional doubts on the ethics questions 1-47 in the curriculum;

Q 29) why is that the least standard breached is performance presentation when the presented results are not correct not due to an error attributable to him? Should not it be misconduct as his intention wasn’t to mislead?

Q 35) where does it say that the shares purchase is for its own personal account, so it can’t be answer b?

Q 47) how is that the allocation for the IPO is correct when he’s doing it only for those accounts which normally are being allocated IPOs? shouldn’t it be allocated for those suitable?

Weird stuff or very detailed stuff? I agree with the posts above. Ethics requires to look into the very details of the standards, hence, should be studied days before the exam to keep everything fresh.