Brian Bellow, a CFA Institute member, is a portfolio manager for Progressive Trust Company. Several friends asked Bellow to review their investment portfolios. On his own time, Bellow examined their portfolios and made several recommendations. He received no monetary compensation from his friends for his investment advice and provided no future investment counsel to them. According to CFA Institute Standards of Professional Conduct, did Bellow violate his duty to Progressive Trust? A) Yes, because he undertook an independent practice that could result in compensation or other benefit to him. B) No, because Bellow provided no ongoing investment advice. C) No, because Bellow provided investment advice to his friends. D) No, because Bellow received no monetary compensation for his services. Your answer: D was incorrect. The correct answer was A) Yes, because he undertook an independent practice that could result in compensation or other benefit to him. Standard IV(A) does not preclude providing independent services for compensation while still employed; however, notification to the employer is required describing the type of service, the expected duration, and the compensation. Compensation includes more than just monetary benefits. Is this right? You can’t even do a favor for your friends for free on your own time? CFAI is out of control.
This is frigging !@#$%. If I went to my boss to let him know that I helped a friend last night, he would say so what? So where do you draw the line? Can I help my father? My girl friend? The following one might ring a bell for most of us as well. After due diligence, a PM recommends that his conservative client add a small position in hedge fund to his portfolio. Was he in violation of some code? There were two camps. One, hedge funds and conservative investor, no matter what due diligence, never go together. I remember comp-ski_kid was in this camp. The other camp, of which this esteemed poster was a member, believed that hedge fund’s addition needed to be viewed in the context of overall portfolio (prudent investor rule) and if due diligence favored its addition, than so be it. To this date, I don’t know the correct answer. I think CFAI really needs to release answers for ethics.
Oh no you didnt CFAAtlanta! That’s opening old wounds… I was in the No-Go camp as they stressed the illiquidity issues and transparancey issues, but then you had the Prudent Investor camp who said its ok when considered as a part of the whole portfolio… I would have personally said its ok b/c the due diligence was done and obviously this person was an accredited investor in order to invest in HFs…but who the heck knows!
This is for sure (A). Don’t tell me this is your first day finding that ethics is impractically crazy!!! 
I can still remember that most silly ethics that they already took away — tell your boss, the first day you are employed, that you are CFA/candidate and force him to read YOUR code of ethics!! - sticky
Now, Now sticky you dont have to ‘force’ him you just have to provide him/her with a written copy and spoon feed it…
bigwilly Wrote: ------------------------------------------------------- > Now, Now sticky you dont have to ‘force’ him you > just have to provide him/her with a written copy > and spoon feed it… oh yeah? Which ethics code now? - sticky
IIB.1.a.i.c states that “All those who go by the name of “Sticky” shall provide their employer with a written form of the CFAI Code of Ethics upon which, “Sticky”, shall spoon feed the code to his/her employer with a spoon made of at least 99.8% Silver.”
So I’m out riding my bike with my brother and he asks if he should have all his money in BSC. I tell him I didn’t think that was wise so he pulls the money and invests in T-bills. Next thing you know, CFAI is yanking my charter for not doing my duty to my employer. (Never let the truth get in the way of a good story)
bigwilly Wrote: ------------------------------------------------------- > Now, Now sticky you dont have to ‘force’ him you > just have to provide him/her with a written copy > and spoon feed it… I think they took this out this year. We just have to inform them that we have to follow the code, we don’t need to give them copies any more. Agree ?
By bosses are Charterholders, so hence it doesn’t matter for me 
but you could be right they might have removed it.
bigwilly Wrote: ------------------------------------------------------- > IIB.1.a.i.c states that “All those who go by the > name of “Sticky” shall provide their employer with > a written form of the CFAI Code of Ethics upon > which, “Sticky”, shall spoon feed the code to > his/her employer with a spoon made of at least > 99.8% Silver.” Excellent! Make sure you quote this in the morning session - sticky
this one i disagree with - i think it’s d as well. And i’m not sure why, but i recall coming across another question that said because X person did it on their own free time, without collecting money and not in direct competition with their employer its ok. now having wrote that, perhaps because brian was providing services that are directly comparable to the services he provides his employer makes the answer A…maybe that’s the trick of this quesiton.
strikershank Wrote: ------------------------------------------------------- > now having wrote that, perhaps because brian was > providing services that are directly comparable to > the services he provides his employer makes the > answer A…maybe that’s the trick of this > quesiton. i thought about this some more and think you are on track here. basically, even though he is not damaging the firm by helping his friends, those same friends might very well need to become clients of the firm if he was not helping them for free. that’s a pretty big stretch, but i suppose there is a case to be made that as an employee, you can’t do anything, no matter how remote of a chance it might be, that negatively impacts the firm’s businss. in other words: capital markets standards / law > client > employer > piece of crap on the street > candidate / member
Friends can front run a trade.