Curious Ethics question....

So yes we all know that we can’t let the banking dept influence our independence and objectivity when it comes to research reports. so this covers the ibanking dept givng us compensation based on our reports. HOWEVER, what if say…you issued a recommendation…and afterwards the Ibanking dept head wanted to say thank you because that recommendaton generated business for them and he gives you a bonus. Can you accept it? I want to say no, because even though the bonus happened AFTERWARDS…it can “appear” that you independence was compromised?

Get a written permission with the compliance department. If yes, pocket that fat check.

Analyst shouldn’t be receiving any kind of compensation related to I-banking. I would think even if it was after the fact it could influence the analyst to keep issuing favorable reports in hopes of getting another bonus. Did you find a question to the contrary… ?

This bonus could be perceived to compromise your FUTURE objectivity.

Right so what is the correct answer? I think the answer is NO, but i remember in one of the exams the answer was it’s ok. Driving me insane.

phBOOM Wrote: ------------------------------------------------------- > This bonus could be perceived to compromise your > FUTURE objectivity. I agree with this you should not engage with anything that could affect your objectivity or trust of your clients in you

IBanking revenue should not impact analyst salary/bonus. Accepting is a COI

kellyc319 Wrote: ------------------------------------------------------- > Right so what is the correct answer? > > I think the answer is NO, but i remember in one of > the exams the answer was it’s ok. > > Driving me insane. was this from sample 2? i think this may be the one they made the error on that i’ve been moaning about for a month… it tells you you are wrong, but if you read the explanation, it says you are right. not sure though.

there was one question like this somewhere where an analyst was compensated for good performance record from a client… and CFAI said it was ok because it reflects past performance… would this be correct?

no, not sample 2…i didnt take any sample exams.

come on Kelly, I expect more from you…

I haven’t rebounded from exam 3 yet, haha. I think i’m having allergic reactions to practice exams right now :stuck_out_tongue: Ahmad – it is ok for the client to compensate you for good performance AFTER THE FACT. I know, this sort of confued me a bit because you can argue that if a PM knows this client has a tendency to reward you, he may spend more time with that specific client’s portfolio than others. This is why i asked the ibanker question…the banking dept gave a bonus to the anlayst AFTER THE FACT. But since this is from the banking dept it’s prob just not ok. ibankers are just bad =)

i hate investment bankers too hahah!! they always bug me to issue a favourable report