Aaaaaaaaaaaaaah nice so we all agree …chad one final point i dont think u can accept the gift for past perfomance with written consent also …dont think disclosure is enuff …not sure
mcf - it has more to do with independence and objectivity as well. Ethics isn’t one-dimensional. You can violate multiple standards with just one act.
pimpineasy Wrote: ------------------------------------------------------- > Aaaaaaaaaaaaaah nice so we all agree …chad > one final point i dont think u can accept the gift > for past perfomance with written consent also > …dont think disclosure is enuff > …not sure Anyone using Schweser look at Book 6, Exam 1 Morning Session Q9. It should clear everything up.
chad17 Wrote: ------------------------------------------------------- > pimpineasy Wrote: > -------------------------------------------------- > ----- > > Aaaaaaaaaaaaaah nice so we all agree > …chad > > one final point i dont think u can accept the > gift > > for past perfomance with written consent also > > …dont think disclosure is enuff > > …not sure > > Anyone using Schweser look at Book 6, Exam 1 > Morning Session Q9. It should clear everything up. @ work chad plz enlighten us…
I think the guidance according to the standard (IV-B) is to disclose the nature, duration, etc. of the arrangement and obtain permission (request and permission should be in written form). Page 75 actually gives an example of a client proposal to use the condo in monaco (if i remember right) if the performance surpasses a certain level etc… and the answer is that the PM violated the standard by not disclosing the arrangement to the employer and not obtaining permission. The reasoning is that the employer is probably in a better and more independant position to have a final word on the arrangement especially that it could result in favoritism for this specific client. Standard I-Bs (independance and objectivity) guidance says something similar. BUT, it also says best practice is to not acccept gifts, benefits that could influence ones objectivity... So, if they surely influence objectivity, its a no. If youre not sure, disclose to employer in writing and obtain permission ( from both clients and third parties). Thats the way i see it…
“After lunch, Alice Adams, a client, offers Harris a 1-week cruise as a reward for the great performance of her account over the previous quarter. Bert Baker, also a client, has offered Harris two airplane tickets to Hawaii if his account beats its benchmark by more than 2% over the following year” According to the Standards of Practice, with respect to the two offers from Adams and Baker, Harris: a) may accept both offers if she discloses them to her employer b) may accept both gifts is she discloses them to her employer and receives permission c) must disclose the offer from Adams to her employer if she accepts it but must receive her employer’s permission to accept the offer from Baker.
I take it the answer was C …hmmmmmmmm interesting thanks a mil Chad
Private Placements are generally restricted stock sold to sophisticated investors (liquid net worth >$1,000,000). Restricted stock is issued in accordance with SEC Rule 144/A and as such can’t be sold within the first 2 years (used to be 5) unless its sold in accordance with the requirements of SEC 144/A. Interesting fact is that since it’s not able to be sold right away, they are sold at a discount to market value (roughly 20% on average). This implied discount is the discount generally aplied to closely held (i.e. privately held) companies to reflect their lack of marketability/liquidity. Most of this is useless for the exam, but it should tie together the valuation of closely held companies and the private placement terminology throughout the curriculum.
Yup. Answer’s C. And the explanation they’ve given was the same thing I posted in the previous post.
right this is exactly what i was talking about in the original post. the answer here is c. the offer from adams only needs to be disclosed but the one from baker needs permission. is the general rule then if its for past performance disclose; if for future then it’s “bigger deal” so get consent too.
looks like it man. these f*kers are so vague at times it’s not even funny. the contradict themselves and that’s the biggest ethics violation in itself.
So, you can do it for future performance so long as it’s disclosed and approved, which is what I’ve been saying.
i think what chad and i were trying to say earlier is that if yo get plane tickets to hawaii and its for future perforamcne u cant take it and simply disclose and go right away to buy your sun screen–you need to take the additional step to getconstent too. so yes i guess its what u were saying mcf
guys/gals these discussions really help esp with ethics …thanks anybody can think of any other grey areas?
Ok. I’ve never seen a question about a ‘pre-gift’ so to speak. Other grey areas… How about the fact that you must always maintain client confidentiality… unless the client is doing something illegal… unless local law prohibits you from doing so.
mcf, is that because local law is conisedered more strict in the case on confidentiallity?
use the more stricter of the two - local vs. CFAI law yeah, ethics, the IPS stuff, and the fixed income ratings stuff is pretty subjective. keep your head down and keep chugging, because it’ll soon be over.
oh dear god the ratings question… always get it wrong
Yes. Now, the one thing I’m unclear on is whether CFA disclosure trumps. If you had to submit confidential client information to the CFA as part of an inquiry (which is required), if local law says you cannot… what do you do?
always preserve client confidientiality if theyre doing something illegal, then you can break confidentiality. but if local law says you cnt break confidentiality, then dont break it even if you see something illegal.