Question about an ethics situation, posed from two perspectives:
You develop a model on your own time during studies as a CFA candidate. After completing the program you are hired by an investment bank to be a research analyst, and you show your model to the bank, who suggests you use it as part of your work. You leave the firm one year later and become employed with one of their competitors, and bring the valuation model with you. Is this an outright violation, or only if you made changes to the model while being employed with the intial investment bank?
One of your best friends is the CFO of a mid-cap public company that is looking to change asset managers for their pension fund. You bring your friend’s business to the bank that you work for, and they generate a significant amount of revenue for the firm. As you have been friends with the CFO since well before your employement with this company, you already had him/her on facebook, and have their personal email address. They changed cellphone number recently and you obtained their new number in your capacity as an employee of your firm. You subsequently leave your employer to accept a position with a competitor, and contact your friend by calling his personal cellphone number, which is not available publicly. Is this a violation re: duty to employer?
I respectfully disagree. The hypothesis is that you created the model on your own and brought it to your first employer. It’s your model, and you’re free to bring it to any future employer you want to.
Now, if you tailored it for your first employer (on their time), then you’re not allowed to bring the tailored version to another employer; in that, you’d need to recreate it.
I have a related question from real life. (corporate banking).
It is a totally common thing that product line (or business line) experts are going from one bank to the other and they are employed with the intent to “bring” a certain product (which they are the expert of) to the new bank. Surely the new bank will have to taylor it and have their own DD and approval process, but the idea, the framework, skeleton for legal documentation, client pitch, etc. is brought by the said expert.
Now if such product expert was a CFA charterholder or candidate would they be allowed to do this practice?
(disclaimer: I never was a product guy so maybe I totally misunderstand the legal framework of banks’ own products).
You may take the original model with you but not any results that you ahve obtained from it. If you adjusted the model since being at the job, you may not take the adjustments with you, and must recreate those adjustments on your own time.
I am inclined to say it is a violation but really can’t decide.
For #2 - would anything change if instead of just calling your friend after signing the resignation papers, you actually called them while still being employed? (ie a situation where you brought the business, long time friend who would clearly follow you to another firm regardless of whether you called before or after officially resigning)
interesting that there are aome differing opinions here. I was thinking along the lines of what s2000 said but was not very fixed on that being the correct answer and was curious to see what everyone thought
1# No, not a violation. if you dont bring any results or modifications you made to the model while working in the firm.
2# Yes. Since you used the resources of your employer to contact your friend. Since, you have personal ID and on facebook - IF you get the details using these forums, it wont be an violation.
In the second case, I think it will be a violation if your friend is still a client of the old company and you persuaded him to become a client of the new firm you work for.
If the guy already had severed ties with the old company and then you persuaded him to join the new company you now work for. Then how is it a violation.
And generally I don’t think it is a violation, because it’s nowhere written that you called him up to change his decision or anything of that sort.
I can certainly call him to check about his granny who is in hospital.
Not necessarily true actually. Its a violation if you noted down the phone number and contacted him later. If you are getting the phone number out of your memory, then its not a violation. Believe me, this was there in some schweser mock I took when I studied for L2 and got it wrong
First one is definitely not a violation - provided:
You did not update the model while at the company.
You are not using the data from the company for proving the capability of the model.
To clarify, I agree that no violation if original model is transferred. Violation if model modified on old employer time or data and/or results used also brought to new employer.
No as long as the model did not get updated on company time
Just use the e-mail you already have and ask him for his number ? What is the reason you are calling him, to go to the movies; you need someone to babysit your kids? Then no for sure
If you are soliciting his business, then e-mail him and ask for his number, say it was on your work phone so you no longer have it.
