I’m getting really confused by the wording in the SOPH and in some of Schweser’s practice questions. For instance, standard IV(B) states the following: “Members and candidates must not accept gifts, benefits, compensation, or consideration that competes with, or might reasonably be expected to create a conflict of interest with, their employers’ interest unless they obtain written consent from all parties involved.” It’s the “all parties involved” that trips me. So if an outside charity wants you to serve on the board of directors, do you need your employer’s written consent, or written consent from the employer and charitable organization? Because I can sure tell you that some of Schweser’s practice questions don’t seem to run in line with this thinking. Moreover, the first line of the first paragraph below standard IV(B) states that the standard “…requires members and candidates to obtain permission from their employer before accepting compensation or other benefits from third parties for the services rendered to the employer or for any services that might create a conflict of interest with their employer’s interest.” Can we just make up our mind already? It’s bad enough to remember that you only need employer approval when undertaking independent practice (a definition on it’s own, part of Standard IV(A)), but when a member/candidate takes on additional compensation arrangements, you need the consent of “all parties involved” (Standard IV(B)). Can someone please clarify this murky interpretation?
i know, it is bad. in general, you need to disclose your work on a charity, for instance, if it occupies a lot of your time and could hinder your work.
studying for the studying for CFA exams could potentially hinder my work … am i required to disclosed that in writing with my employer? as well as from the CFAI?
But who must you receive written consent from? In other words, if a multiple choice questions asked that same questions, and two of the answers were (i) your employer, or (ii) your employer and outside organization, which do you pick? CFAi really makes the Code and Standards so wonderfully vague.
gdiddy Wrote: ------------------------------------------------------- > But who must you receive written consent from? In > other words, if a multiple choice questions asked > that same questions, and two of the answers were > (i) your employer, or (ii) your employer and > outside organization, which do you pick? > > CFAi really makes the Code and Standards so > wonderfully vague. just consent from employer, I believe.
I thought it was the organization too. Because your employment with your employer could possibly conflict with how perform your duties for the organization. Whether it be time commitment or other issues as well.
Well that’s the point of ethics. It really depends. The party who is *likely* to be affected more by your *new actions* should definitely give written consent. And in same cases, where you think the party for which you are accepting new work, needs to know that you already have a loyalty duty to your employer - must provide written consent. But if the new party already understands you have a job and doesn’t expect you to do sizeable work or is not compensating you, then you don’t need their written consent. cuz its understood and hence their consent is implicit in their offer to ask you to work with them. its F@$@ man. just use your best ethical guess.
I have seen a few ethics questions on this on here, the answer is let your employer and the other party know, most of the time.
Question 1 Which of the following statements is most correct concerning a members obligation to his or her employer under the Code and Standards? A) Members are prohibited from making arrangements or preparations to go into competitive business before terminating their relationship with their employer. B) Members are prohibited from undertaking independent practice in competition with their employer. C) Consent from the employer is necessary to permit independent practice that could result in compensation or other benefits in competition with the member’s employer. D) Consent from the prospective clients is necessary to permit independent practice that could result in compensation or other benefits in competition with the member’s employer. Question 2 Marc Feldman, CFA, is manager of corporate investor relations for a high-tech startup, zippy.com, in Boise, Idaho. Feldman is well-known in the high tech community in Boise, and Dragon.com has asked if he will help them organize their investor relations function on a consulting basis. They offer him an all-expenses-paid two-week holiday for two on Australia’s Gold Coast in payment. Regarding this offer as a CFA Institute member Feldman is: A) allowed to accept the offer only with written approval from zippy and from Dragon. B) allowed to accept the offer only with written approval from zippy. C) not allowed to accept such an offer since it effectively places him in competition with his employer. D) not allowed to accept such an offer since the compensation is non-cash and, therefore, is hard to quantify for the purpose of adhering to the Code and Standards. In first question Written Permission is required from employer in choice ‘c’ and in choice ‘d’ permission is required from the prospective clients only. In this situation, first preference should be employer for written permission. Getting permission from prospective client is not a top priority. In second question Choice ‘b’ requires permission from only the employer and in choice ‘a’ it requires written permission from all parties involved. In this case, best course of action is to opt for answer B because this leaves no scope for violation of ethics. If a question comes in like first 1st then opt for taking permission from employer and if 2nd type of question comes in then opt for choice that requires permission from all parties involved. I hope this helps.
I think the point of confusion is why would you need written permission from the party that is making the offer? Example: I’m working at Target when Walmart offers me a weekend gig…I obtain written approval from Target. Then what? Do I call walmart and say “Hey my firm said its cool, can you please give me written permission to accept your job offer?” Doesn’t make much sense to me (maybe if I stop trying to use logic with ethics questions I would score better on them :))
> Doesn’t make much sense to me (maybe if I stop > trying to use logic with ethics questions I would > score better on them :)) yeah stop using logic. ethics doesn’t go by logic. ethics goes by what is the best recourse to do that’ll demonstrate you as a responsible ethical investment professional. For question 1, i’d pick C. But D is more prohibitive and more valid, if you are going to have independent practise that competes with your employer, i doubt your employer is ever going to consent. For question 2: i’d say A. because it scompetition both parties must agree.
spirit, that makes sense.
Based on the Target/Walmart example, I would venture that by informing Walmart in writing of your existing duties at Target, you are covering your a$$ in case Walmart decides at a future time that your employment at Target does lead to a conflict of interest. The person at Walmart who hired you might not be available to testify that he was aware of your existing duties, and in that case, your disclosure would be the only proof that you had informed Walmart of a potential conflict of interest. This is just my interpretation though. Unfortunately CFAI is not very clear on the rationale for this policy in the SOPH.