Portfolio Manager at a large investment firm. One of his clients invites him to be a guest at his suite for a major league baseball game. He accepts and attends. The next day at work, he talks about the game with his supervisor, but does not mention the fact that he attended the game with a client. His actions: A. are in violation of Standard I(B) Independence AND in violation of Objectivity and Standard I(A) Knowledge of the Law. B. are NOT in violation of Standard I(B) Independence AND NOT in violation of Objectivity and Standard I(A) Knowledge of the Law. C. are in violation of Standard I(B) Independence BUT NOT in violation of Objectivity and Standard I(A) Knowledge of the Law. A. are NOT in violation of Standard I(B) Independence BUT in violation of Objectivity and Standard I(A) Knowledge of the Law. Sales position at a registered investment adviser. As part of his employment, he is expected to entertain clients from time to time with dinners, etc. He frequently drinks excessively. On one occasion, after dropping off a client, he is cited by local police for public intoxication. According to CFA Standards is he in violation of either: Standard I(A) - Knowledge of the Law | Standard I(D) Misconduct A. YES | YES B. YES | NO C. NO | YES D. NO | NO
on top of my head: #2: no/no whatever you’re doing outside - it’s your business only
1). It’s okay to go to the game because the individual is a current client, not someone looking to gain influence… but it must be disclosed to a manager. Not sure how to best capture that given the odd options given. I’d argue he’s in violation of ‘knowledge of the law’ … but has independence or objectivity really been violated? 2) D. This questions has been long debated here recently.
the book says: #1 A in violation of both … i can see why he would violate independence because he may offer preferential treatment to this client later and violate knowledge because he purposely left out that information when talking to his supervisor #2 D not in violation of either … i can see why he did not violate knowledge here because it wasn’t a serious crime, but wouldn’t he have violated misconduct by “reflecting adversely on his reputation”? or not, because this doesn’t affect others view of him or their willingness to bring him business?
#2 has been debated forever. I personally think it reflects poorly on his reputation. I also think he violated “knowledge of the law” … but you can argue there’s no proof he was drunk and he was only cited, not convicted.
B, and D. regarding first, I don’t see why he has to say, hey look I went on a game with a client. the question doesn’t mention any compensation, that would require disclosure.
Being a guest in a suite is definitely a form of non cash compensation.
C and C
these Qs are from controversial Book 6 and have been debated and discussed multiple times
- C - My thought behind this is that this would be a violation as it is part of his employment and negatively impacts his reputation and the reputation of his firm.