Geno Hanson is a portfolio manager at bigtime investments. James ward, an old friend of hanson’s, is an excutives head hunter in the same city. Hanson’s friend has approached him about referring to Hanson’ firm any high level excutives that he places locally. In return, the freidn would like to play a round of golf at hanson’s country club for each new client referred. Hanson i snot sure if this arragnemnt violated CFA institute sandards of professional conduct. according to standard VI© referal fees, which of the following statements is True: A Hanson must disclose the arragnement with ward to his emplyer, all clients and all prospective clients. D. hanson must dislocse the arragnement with ward to his employer and to prospective clients referred by ward prior to entering into any formal agreement for services I wonder why it is not A. Under VI© referral fee, it is written members and candidates must disclose to their employer, clients and prospective clients, as appropriate, any compensation, consideration, or benefit received by, or paid to, others for the recommendation of products or services. Fred Reilly,CFA, an investment advisor at a regional office of a national financial insitution, has been informed byh a long term client, rob harrison, that he would like to terminate the relationship and move his company’s pension plan and his personal account to another firm. reilly obliges and completes the paperwork to close the account. as reilly gathers the files on harrison’s personal account to put into storage, he notices some discrepancies which lead him to suspect that harrison has engaged in illegal activity with regard to company funds. which of the following actions is most apprpraite for reilly to take under the standards: B. reilly reports his suspicions to governmental or regulatory authorities D. reilly reports his suspicions to outside counsel. why it is not B? what are the example of governmetnal or regulatory authorities? i found few options could be confusing: supervisor, CEO, compliance officers, outside counsel, regulatory authorities? what are the differences between all these? which one is best for which senarios? thanks
- VI© talks about disclosing referral fees to clients & prospective clients who are referred, not all clients. It’s there so that clients can assess any bias inherent in the relationship. It would be monumentally irrelevant to disclose this to all clients who have come from other sources. 2) >i found few options could be confusing: supervisor, CEO, compliance officers, outside >counsel, regulatory authorities? what are the differences between all these? I hope you know the differences between these!! Remember - depending on your jurisdiction, you may or may not need to blow the whistle on this guy (report it to the regulatory authorities). To determine your legal responsibilities, the CFAI reckon you need to speak to your lawyer.
- Upstairs is correct about 1. that is what the answer says.Only relevant future clients need to know about it, not current clients. I found this tricky, because almost all the time, current clients would like to know, so they can make changes if they want. And even in the handbook, it is written, to all current clients and future clients. I guess i just need to accept it. 2) I think when it comes to arrangement of additional compensation, or any other potential violation under the conflictions with employers, one always reports to immediate supervisor. I do not see in any circumstance, one goes to CEO. I cannot identify the difference between compliance officers or oursite counsel, how do they play different roles? Regulatory authorities is only when you cannot find justice within the firms, including the compliance officer. and you are sure it is illegal?