Harris is a PM for Islandwide hedge fund and is commonly involved in complex trading strategies on behalf of Islandwide and maintains a significant relationship with Quadrangle Brokers, which provides portfolio analysis tools to Harris. Recent market volatility has led to high trading volume and commisions with Quadrangle for the quarter. In appreciation of the business, Quadrangle offers Harris an all expense week of golf at a top resort for her and her husband. Harris discloses the offer to her supervisor and compliance officer and based on their approval, accepts the trip. Right according to Schweser this IS a violation and she should not accept the offer BUT THEN: Alice adams, a client, offer Harris a 1-week cruise as a reward for the great performance of her account over the previous quarter. Bert Baker, also a client, offerered Harris two plane tickets to Hawaii if his account beats its benchmark by more than 2% over the following year. Over here the correct answer is Harris can accept the offer by alice adams without permission from employer but must disclose it and can also accept the Bert Baker offer as long as he discloses it AND gets permission from his employer. To me the Bert Bakers offer seems a lot worse than the Quadrangle offer in the question above. The bert bakers one is based on future performance and can lead to unfair client treatment etc etc… Can someone please explain what the difference is between these two??? Thanks
You cannot accept expensive gifts from someone you do business with. This will lead to people thinking that you are favoring them. I read it the forum before that if a client offers you a gift for past performance, then you need to only disclose it before accepting. If the client offers you a gift for future performance, then you need to disclose and get permission from the employer. I hope someone else comments on this.
I had thought that you can’t accept gifts as incentive for future performance even if supervisor approves it… makes no sense as doesnt mean that a supervisor’s approval would render the possibility of unfair or objective treatment for all client void.
The rule is: Gift for Past Performance from client: Disclose to Employer Gift for Conditional Future Performance from client: Must receive approval from employer Gift for work outside of Investing Activities: No disclosure needed Gift from Company/Investment Banker/Referral: NEVER accept