Jim Taylor works as a portfolio manager for Rose Capital and also serves as president of the Little League board of directors in his town. He receives no money from Little League, however the local golf club provides him with a free membership for volunteering his time on the Little League board. Taylor’s involvement with Little League is in his company biography, but the club membership has not been disclosed to Rose or his clients. Taylor has: Your answer: D was incorrect. The correct answer was B) violated the Standards by not disclosing the club membership to Rose, but not by failing to disclose it to clients. He must disclose any compensation to his employer according to the Standard on disclosure of additional compensation arrangements. However, the golf club membership does not likely represent any conflict of interest with clients. Why does he have to disclose this arrangement if it has nothing to do with getting additional compensation work related… It clearly states that he is getting this free membership bc of his involvment with the Little League… Any Thoughts???
Lets see. He needs to disclose all benefits that he gets to his employer. This benefit, however, does not conflict with his relationship with clients, as, its just a free golf membership. So likely it will not impair his judgements and blah blah blah.
I don’t think the question gives enough information. Do any of Jim’s client’s work with the Little Leage or golf club? If so, then he should disclose it to his employer. It’s a tricky question. If it is a question from a test prep provider, I probably wouldn’t worry too much about it. I have only gotten as far as the CFA sample tests #3.
In the securities industry, you have to disclose ANY outside employment, or anything that involves compensation. Period. I play music part time and gig occasionally. Probably make less than $2k a year doing it. But I still have to disclose it.