Ethics

CFA Level II
#1

Swamy recently joined Dillon associates, an investment advisory firm. Swamy plans to continue serving on the board of directors of landmark enterprises, a private company owned by her brother in law, for which she receives $2,000 annually. swamy also serves as an unpaid advisor to the local symphony on investing their large endowment fund and receives four season tickets ot the symphony performances. According to IV Duties to EMployers, which of the following is most likely required of Swamy? Swamy must: A) deliver a copy of the code and standards to her employer before performing services for the symphony. B) secure written permission from her employer before performing services for the symphony. C) inform her immediate supervisor in writing that she must comply with the code and standards. D) disclose to her employer any additional compensation she receives from Landmark enterprises and secure written permission to serves on board.

#2

I’d say D.

#3

I would go with D as well.

#4

D?

#5

D.

#6

thats what i thought too… but alas, no. i really thing both B and D need to be disclosed. Your answer: D was incorrect. The correct answer was B) According to Standard IV Duties to Employers, Swamy must secure written permission before undertaking the investment advisory work for the symphony because this work competes with her employer and could create a conflict of interest, as she is receiving compensation in the form of season tickets. Her service on her brother-in-law’s board may be subject to employer rules about outside employment but is not covered by the Standard since there is no likely competition or potential conflict with her employer. The question says “most likely,” so it is important to focus on the key difference between the two outside activities. Both are compensated; the fact that one is cash and the other tickets is irrelevant. The key difference is that for the symphony, Swamy is acting as an investment advisor for a large endowment, which clearly competes with her employer’s business. The actions in answers A and C are not required by the Standard. (Study Session 1, LOS 2.a)

#7

tricky question

#8

hmmm…

#9

I don’t know about this one.