Sue Smith, CFA, works full-time as an investment advisor for the Warren Group, an asset management firm. To help pay for her children’s college expenses, Smith wants to engage in independent practice in which she would advise individual clients on their portfolios. She would conduct these investment activities only on weekends. Which of the following statements about Standard IV(A), Loyalty to Employer, is most accurate? Standard IV(A): A) does not require Smith to notify Warren of preparing to undertake independent practice under the current conditions. B) precludes Smith from entering into an independent competitive activity while still employed by Warren. C) requires Smith to notify Warren in writing about her intention to undertake an independent practice. D) requires Smith to obtain written consent from both Warren and the persons from whom she undertakes independent practice.
This would be A.
D? Also A is correct as stated.
Answer by Schweser is A. But, this seems like a real awful question. A potential competitive independent practice requires written approval from current employer.
map1, you are right. This is the official answer: Your answer: D was incorrect. The correct answer was A) does not require Smith to notify Warren of preparing to undertake independent practice under the current conditions. Standard IV(A), Loyalty to Employer, requires that Smith obtain written consent only from her employer before she undertakes independent practice that could result in compensation or other benefit in competition with Warren. It is not required to get permission from your employer when only preparing to go into independent practice. How can we assume that she is only PREPARING to go into independent practice? What if she charges her clients on weekends? Isn’t that in competition with Warren?
Yeah, sounds like, to me, that she would be in competiton with her employer somehow some way. Doesn’t seem like a safe route to keep that from her employer.
She is only thinking and wants to go into independent practice. That’s not equal to undertaking independent practice (I’m thinking and I want to eat some foie gras, that’s not equal to I eat foie gras). Whenever she is ready to enter independent practice, and she finds a client too, before entering into a contract with the client she has to notify her employer and obtain written permission to do so. I guess she would in fact need the agreement of both parties (her current employer and her new, independent client).
Ok, thanks map1, I got the point. This is really a trick question with a fine line between preparing to go into independent practice and actually doing this.
Hold on a minute. The “preparing” thing is only mentioned in choice A. The problem does not say she is preparing, that’s why I said D is a correct answer as well.
Yes, D is correct too, but A is more so, given the actual condition.
The reference in the question “Smith wants to” probably is equivalent to preparing to, or at least more so related to preparing than actually doing.
For me the first hint that D is incorrect is D)…and the persons from whom she undertakes independent practice. How can it be related to sop?..