ethics: paying for travel

Is the financial analyst required to pay for all travel accomodations or is it only recommended by the code & standards? Or, does it depend on the circumstances, i.e, the business for which the financial analyst must analyze for research is located in a remote area, therefore that company will pay? I think that I’ve looked at so many ethics questions that I’m beginning to overthink some of this stuff. Any help?

If it is remote – and inaccessible - Company (the one for whom research is being performed) may pay. In all other cases - if there is some form of usable transport is available, that must be made use of.

^ and nothing but a private jet of a client goes to some farm - there’s no violation of using it w/o paying

see p.20-23 Application of the Standard Example 1. Steven Taylor, a mining analyst with Bronson Brokers, is invited by Precision Metals to join a group of his peers in a tour of mining facilities in several western U.S. states. The company arranges for chartered group flights from site to site and for accommodations in Spartan Motels, the only chain with accommodations near the mines, for three nights. Taylor allows Precision Metals to pick up his tab, as do the other analysts, with one exception—John Adams, an employee of a large trust company who insists on following his company’s policy and paying for his hotel room himself. Comment: The policy of Adams’s company complies closely with Standard I(B) by avoiding even the appearance of a conflict of interest, but Taylor and the other analysts were not necessarily violating Standard I(B). In general, when allowing companies to pay for travel and/or accommodations under these circumstances, members and candidates must use their judgment— keeping in mind that such arrangements must not impinge on a member or candidate’s independence and objectivity. In this example, the trip was strictly for business and Taylor was not accepting irrelevant or lavish hospitality. The itinerary required chartered flights, for which analysts were not expected to pay. The accommodations were modest. These arrangements are not unusual and did not violate Standard I(B) so long as Taylor’s independence and objectivity were not compromised. In the final analysis, members and candidates should consider both whether they can remain objective and whether their integrity might be perceived by their clients to have been compromised. Example 8. Tom Wayne is the investment manager of the Franklin City Employees Pension Plan. He recently completed a successful search for a firm to manage the foreign equity allocation of the plan’s diversified portfolio. He followed the plan’s standard procedure of seeking presentations from a number of qualified firms and recommended that his board select Penguin Advisors because of its experience, well-defined investment strategy, and performance record, which was compiled and verified in accordance with the CFA Institute Global Investment Performance Standards. Following the plan selection of Penguin, a reporter from the Franklin City Record called to ask if there was any connection between this action and the fact that Penguin was one of the sponsors of an “investment fact-finding trip to Asia” that Wayne made earlier in the year. The trip was one of several conducted by the Pension Investment Academy, which had arranged the itinerary of meetings with economic, government, and corporate officials in major cities in several Asian countries. The Pension Investment Academy obtains support for the cost of these trips from a number of investment managers, including Penguin Advisors; the Academy then pays the travel expenses of the various pension plan managers on the trip and provides all meals and accommodations. The president of Penguin Advisors was one of the travelers on the trip. Comment: Although Wayne can probably put to good use the knowledge he gained from the trip in selecting portfolio managers and in other areas of managing the pension plan, his recommendation of Penguin Advisors may be tainted by the possible conflict incurred when he participated in a trip paid partly for by Penguin Advisors and when he was in the daily company of the president of Penguin Advisors. To avoid violating Standard I(B), Wayne’s basic expenses for travel and accommodations should have been paid by his employer or the pension plan; contact with the president of Penguin Advisors should have been limited to informational or educational events only; and the trip, the organizer, and the sponsor should have been made a matter of public record. Even if his actions were not in violation of Standard I(B), Wayne should have been sensitive to the public perception of the trip when reported in the newspaper and the extent to which the subjective elements of his decision might have been affected by the familiarity that the daily contact of such a trip would encourage. This advantage would probably not be shared by competing firms.

thanks a lot, gl on the studying

u can accept the offer as long as u get written consent from ur employer

ancientmtk Wrote: ------------------------------------------------------- > u can accept the offer as long as u get written > consent from ur employer No. This is related to Standard I(B): Professionalism: Independence & Objectivity, not Standard IV(B): Duties to Employers: Additional Compensation Arrangements. Moreover, the decision isn’t so cut-and-dry. I’ve already posted above the relevant sections of the Handbook.

Listen to this… from Book 6 sample exam 2 afternoon: Judy Dudley, CFA, is an analyst and plans to visit a company that she is anlyzing in order to prepare a research report. Standard I(B) Independence and Objectivity: a. requires dudley to pay for all her own expenses and to not accept any gifts or compensation for writing a research report. b. requires dudley to pay for her own transportation costs, to not accept any gifts or compensation for writing the report, but allows her to accept acomodations and meals that are not lavish c. requires dudley not to accept any compensation for writing a research report, but allows her to accept company paid transportation, lodging, and meals d. allows dudley to accept transportation, lodging, expenses, and compensation for writing a research report, but requires that she discloses such arrangement in her report. One tricky question. what you gys think?

I think the answer is D. These expenses can be paid for by the company under certain circumstances (i.e., if the site is remote and inaccessible by commercial airlines). Since the circumstances are not provided here, “allows” is the best choice. Disclosure of the potential conflict of interest is required here though, as always.

I think it A. Always take the conservative side if the conditions are not detailed…

The answer is d, but I did selected A though. I think this question doesn’t pass the “may have another possible answer” test. Both A and B are possible… I’m getting worried for this test, my results haven’t been consistent, I went from getting 90% in stats in one sample exam to only getting 40% in another sample exam.


A and D I mean. The answer again is D.