help: ethics...

Sheramy, a portfolio manager for Woodbridge Investment handles the account of Zamborino, a client of the firm. Zamborino offers to pay Sheramy a $100,000 bonus over and above her compensation from Woodbridge Investments if Sheramy achieves an 18 percent annual return for Zamborino’s account. Sheramy: A- Cannot accept this offer because it will interfere with her independence and ability to be objective regarding investment decisions and recommendations. B- Can accept this offer and disclose the bonus to her employer only if she actually achieves the performance target and receives the gift. C- Cannot accept this offer because it is outside of her primary employment relationship with Woodbridge Investments. D- Can accept this offer as long as she discloses the arrangement to her employer. I put A…isn’t true that he will probably apply more time to this new portfolio with a bonus inside? I fon’t know if is D, but even though he needs the confirmation by the employer or not? any help brave ones? many thanks

its d

hi kurupt, but he does need approval from employer or not. disclosure is enough? (this is a disclosure of conflicts or additional compensation?) ethics is my nightmare, believe me…

This is something that gets to me too… Disclosure is needed in writing, right? And permission to accept the gift/compensation is needed in writing too, right?

Generally if a compensation agreement already exists (ie there is already a client relationship) then only disclosure is required, although your employer would have the right to say no you cannot take that gift, in which case you’d have to comply with the emloyer. Written permission is not required but it is implicit in disclosure.

Many thanks once again if i go to london we will meet (with the upgrader i hope) ! hasta

Thought I’d chime in. Take this with a grain of salt because I’ve only just skimmed the ethics section, but I think you can eliminate A because “independence” and “objectivity regarding recommendations” would probably have more to do with if this fellow represented some firm you could potentially end up recommending to your clients because you’ve got this other deal with him. He’s offering you extra money to perform well, and that isn’t going to affect your actions – if you know ways that you can get this client 18% it’d be in your interest to apply that knowledge to all of your clients’ portfolios assuming they had similar risk appetite, time horizon etc. hth.