terry welch, cfa is a portfolio manager for barr investmnets welch began sisng ORH brokers as his sole broker five years ago. ORH’s competitive fees and sperior trade exection has drawn the attention of welchs’s coleagues, may of whom now only use ORH to place trades. In appreciation for the long standing relationship, ORH recently offered Welch tickets to a sold out performance of the local symphony, which he graciously accepted. the tickets had a total value of $90. two day slater, one of welch’s clients presented him with a samll, engaraved desk clock as a thank yo gift for the outstanding performance on the client’s protfolio overe the last yeat. welch accepted the desk clock which had a value of 80. welch decided not to report either of the gifts to his employer since he was about to go on vacation and since the gifts did not meet barr’s reportable threshod valeu of 1—. did welch’s actions with regard to the symphony tickets or the desk clock violate any CFA institute standards of professiona; conduct? symphony tickets desk clock no no no yes yes no yes yes it is from book 7, no wonder so wordy
Yes and Yes.
agreed. he’s supposed to report to employer regardless of value.
I`d say yes and yes. He has to declare all gifts to his employer, who will assess whether it influences his objectivity-independance in any manner.
na… answer is no yes. if the gifts can possiblly hurt independence and objectivity, then refuse immediately. if the gifts are not going to hurt independence and objectivity, then if the gifts are from clients, one will need to get written consent from employer regardless of the value. the symphony ticket is not from client and with small value, so it is okay to accept without reporting. another situation is, rewards that are contigent on futurre performance, this needs to be reported always because analysts have no power to gaurantee future performance. any one can confirm with me about this? i am getting confused with all possible circumstances.
I disagree. gifts from non-clients are even more likely to compromise objectivity.
does that mean under no circumstance, u can avoid reporting to the employer?
Yea I agree with lola, I thought it was “more” ok to accept gifts from clients because of superior results. The gift from the brokerage is not used to the clients benefit, I do not see how he can accept that without disclosing…