1 John is a portfolio manager for a wealth management firm and becomesa board member of a local charity. No compensation is involved and the hours don’t impede his work. Does he have an obligation to disclose this relationship to his employer under standard IV? 2 Same basic facts, but now he is a board member of a small company and receives nominal compensation. The company is not publicly traded and is in no way related to the work he does for his employer. Again, does he have to disclose under IV or VI?
In 1, he doesn’t have to disclose. 2, must disclose due to compensation …I think
Remember the service to the small company doesnt compete with his work at the IA firm. I’m trying to figure our if directorships, per se have to be disclosed. Another scenario: same situation as #1 (charity), only now they asked you to volunteer you skills to make recommendations on portfolio allocation. Again, it doesn’t take much time, but you are rendering free advice within your profession.
If it doesn’t take much of your time, doesn’t conflict or compete, and you aren’t compensated, then I don’t think you have to disclose it to anyone. Again, I could be wrong but this is my understanding.
And if you’re compensated?
Can someone help here? Might be over thinking this, but I believe you have to notify your employer of any outside compensation. Help…anyone?
Guys - if you are volunteering on a board for a local charity and asked to help manage their fund, then you are in conflict because your employer is paying you to be a fund manager and your also advising someone else on the side. This puts you in a conflict because you may advise them on a buy before you advise your clients or make the same purchase yourself.
CFA_Chap - but what if the local charity is Fixed Income and your employer funs a currency arb fund.
@ thegooddocta - anything finance related would be in conflict w/ your current job. What you wouldn’t have to disclose is if you ran an ebay business, or were bartending on the side.
My guess is that we’re in the clear provided that the service doesn’t compete with or deprive the employer of any benefit. Of course, like to be certain of this.
Good point, but suppose front running not a risk. Perhaps you’re just consulting on mutual funds. I know the exam is going to ask some very fine line questions of this nature. CFA_Chap Wrote: ------------------------------------------------------- > Guys - if you are volunteering on a board for a > local charity and asked to help manage their fund, > then you are in conflict because your employer is > paying you to be a fund manager and your also > advising someone else on the side. This puts you > in a conflict because you may advise them on a buy > before you advise your clients or make the same > purchase yourself.
Under standard IV even when no compensation is involved? ftwcfa Wrote: ------------------------------------------------------- > @ thegooddocta - anything finance related would be > in conflict w/ your current job. > > What you wouldn’t have to disclose is if you ran > an ebay business, or were bartending on the side.
ftwcfa Wrote: ------------------------------------------------------- > @ thegooddocta - anything finance related would be > in conflict w/ your current job. > > What you wouldn’t have to disclose is if you ran > an ebay business, or were bartending on the side. Finance related is what you have to watch out for. They are not going to go so far as saying fixed vs euro equities.
CFA_chap, which standard is violated, IV b or IV a?
@ftwcfa You would still have to disclose a job like bartending on the side, even if it’s non finance related. The time-consuming activities might detract from your ability to fulfill your responsibilities with your current employer. This judgement call is made by the employer not the employee, thus it would be pertinent to disclose & get permission before accepting job. If you worked for JPM would they want you showing up on Monday morning running off 3 hours sleep because you had to close the bar on Sunday? No. You would certainly be depriving your employer of your skills and abilities because you wouldn’t be able to preform them at an adequate level. See: pg 97 Example 9 Where Alfonso Mota is an Analyst and also serves as part-time Town Mayor (w/ compensation).
@mbozicco - I remember that question. There is a nuance there. Good call.
mbolzicco Wrote: ------------------------------------------------------- > @ftwcfa > > See: pg 97 Example 9 Where Alfonso Mota is an > Analyst and also serves as part-time Town Mayor > (w/ compensation). mbolzicco, the point was made that this side job would not conflict, as far as time goes, with your current job. Therefore, if you do have a bartending job (or sell fire trucks, etc.) and work a reasonable amount of time that does not hinder your ability to perform your “real” job, do you have to disclose the job & the compensation to your employer?
If thats the case, my take is based on example 9 pg 97. The way the answer is worded makes me believe that if the job were not time commitment heavy, then he would not have to disclose - even given the fact there is compensation involved (because its not competing & not reasonably expected to create a conflict of interest). flip a few pages to p. 100 and look at Example 2 now where it tests Additional Compensation Arrangements. Here the analyst sits on the board of Exercise, is compensated (non-monetary in this case) and the analyst buys the Exercise stock for clients for whom its appropriate. This is where you have to disclose the compensation arrangement before you take the position to sit on Exercise board because its reasonably expected to create a conflict of interest. Where the analyst screws up is by not disclosing. side note - I would hate to loose my CFA charter one day because I didn’t disclose my gym membership!
Good feedback guys. This is helpful, and I realize I’m not alone in my confusion.
These are very tricky, subtle points. Level 2 ethics is clearly no joke.