Doug Watson, CFA serves in a sales position a xyz Brokerage, a registered investment adviser. As part of his employment, he is expected to entertain clients from time to time with dinners, professional sporting events, and golf outings. Frequently at these client outings, Watson drinks excessively. On one occasion, after dropping off a client, Watson was cited by local police for public intoxication. According to CFA Institute Standards and Professional Conduct, is Watson in violation of either Standard I(A) Knowledge of the Law or Standard I(D) Misconduct? ___Standard I(A)________Standard I(D) A.___YES_________________YES B.___YES_________________No C.___NO__________________YES D.___NO_________________ NO Answer is D. I understand why standard I(A) doesn’t apply, but how does I(D) not apply either?? Is it because Watson isn’t doing “professional work”, so it’s ok for him to get arrested for public intoxication? In the book, CFA describes an example of an investment officer who gets drunk at lunch, then goes back to work and trades while intoxicated. That’s a violation. I don’t understand how this is not a violation. Doesn’t this behavior “reflect poorly on him, his employer, and the investment industry”? Is a real CFA exam question going to be this ticky-tacky? I feel like this is splitting hairs. CFA says when and when it’s not ok to get caught being drunk???
that is how ethics words - very granular and you will go nuts on the real test. here, he gets busted OUTSIDE of work. If you go back after lunch and make a decision for a client while faded, it is wrong.
also has something to do with what he does on his own time, vs. what he does on his “client’s time”. similarly you will find instances of people protesting things like greenpeace on their own time, getting arrested for it. maybe a anti-nuclear lobby party, where they get arrested while on their own time. All of these are not violations of the standards.
what if investment adviser (intoxicated) is involed in a car accident with his client sitting besides him and getting seriously injured…will this be a violation?
If he’s on work time and gets hammered, it’s a violation. Also, drinking with a client reflects poorly on his professionalism.
Drinking outside the hours where the analyst is required to perform his profession, and drunk driving, are not violations of the code. Violations of the laws, but not of the Code. As long as it has nothing to do with the exercise of the profession, it is not a violation.
faraz70s Wrote: ------------------------------------------------------- > what if investment adviser (intoxicated) is > involed in a car accident with his client sitting > besides him and getting seriously > injured…will this be a violation? not if its friday night. if tuesday @ 2PM, yes.