How is this ethics question right?

CFA Level III
#1

I hate Schweser with a passion more and more.

Here is text form the passage:

Prior to leaving his current employer, XX, Larson contacts 25 individuals from an affinity prospect list by calling them, using public records and not XXs records, on saturday mornings from his home. Of the prospects, a list of 10 individuals had preivously been rejectd as being too small for XX, but they still meet his new firms standards. The other list of 15 individuals remained viable prsopects for XX. After learning of their status with XX< LArson sugests that all 25 prospects consider directing their busines to him and his new firm.

In soliciting the list of 10 preivously rejected prospects and the list of 15 viable parsopects, did larson violate any CFA standards?

A) no regarding both lists

B) yes rgarding both lists

C) Yes regarding only one of the lists.

What do you guys think? Wouldnt it seem like the answer is B because he wouldnt have gotten any of the names without the list from his current employer in the first place?

#2

I think it is C

#3

C.

The 10 rejects are ok, the 15 are not eventhough he did not use company records bc he still works for the company and owe them a Duty of Loyalty.

#4

C. Standard IV “…simple knowledge of the names and existence of former clients is generally not confidential information unless deemed such by an agreement or by law.” One of such agreements may be the non-compete agreement (which is absent in this case)

#5

That’s B.

He still worked for the old company! He can’t contact them to solicit. Violation of duty to employer. Easy.

The violation happened when he picked up the phone to call them, regardless of whether they were too small for his existing firm (which he didn’t know at the time)

#6

100% C I’m afraid, in his duties to employers he is not violating anything if he contacts clients that are too small for his current employers.

You are speaking to people your current employers have already rejected in your own time so you are denying them neither business, nor your services.

On the other hand whether or not you obtain records from public sources or not, you cannot approach your current companies clients

#7

i think the key point to note here is “rejected”, therefore that group (of 10) is now out of your current employer’s pool of “prospects” as well as “existing” client base

#8

It should be B, as he is competing with the firm’s business.

#9

it should be B

#10

So the answer in the book is C…

Accoridng to Loyalty, Larson must not solicit current or prospective XX cients prior to his leaving. Larson is allowed to solict prospets that have been rejected by XX as long as he does so on his own time, does not use XX client lists and is acitons do not impair his performance at work. His solicitaiton of prospects who are still viable for xx is a clear violaton of duty to his employer.

But its kind of backwards to me… since the answer says does not use XX client lists… which he does…

He wouldnt get that list in the first place without working for XX.