Ethics - other compensation

Mr Baker is a bond analyst. His friend asked him to be on the Board of his company which has nothing to do with bonds or the bond industry. Of course, he will get paid in cash and benefits for being on the board. Does he have to disclose and receive permission (from current employer)?

Yep. Seeing as he is being compensated for his time serving on the board, Baker may allocate more time away from his bond analysis.

I guess the answer (and according to Schweser) is “no” it doesn’t need to be disclosed/approved because this arrangement “cannot be reasonably expected to create a conflict of interest”. (I would have been fine with this, but I specifically remember seeing a conflicting Q/A saying that any compenstation had to be disclosed.)

The Question states, “According to Standard IV(B) - Additional Compensation Arrangements” (sorry, I should have mentioned before - I guess this must be the difference).

I guess it would have been different had the question asked “According to Standard IV(A) Loyalty” - which states that we must “refrain from any conduct that would injure the firm, deprive it of profit, or deprive it of the advantage of the member and candidate’s skills and ability.” Do you agree?

Yeah, that was my thinking exactly. However, I still think it should be disclosed. Don’t you?

Well, Schweser says “does not need to disclose the offer or received permission”. I don’t know if that means you might have to still disclose acceptance of the offer… (book 6 page 149) Thanks

So if i got myself a part-time job in the evening, there is no requirement for me to disclose this to my employer?

CFAI says you only need consent from employer if you go into independent practice doing services that the employer currently provides numeration for.

In the code it says that additional compensation must only be disclosed if it can be expected to conflict with interests of the employer, since it clearly states this position is unrelated, he is fine. However, just as a reminder, if it does fall under disclosure in this section, written consent is required from ALL parties before said compensation may be accepted, they’ll catch you on that.