Sue Parsons, CFA, works full-time as an investment advisor for the Malloy Group, an asset management firm. To help pay for her children’s college expenses, Parsons wants to engage in independent practice in which she would advise individual clients on their portfolios. She would conduct these investment activities only on weekends. Which of the following statements about Standard IV(A), Loyalty to Employer, is most accurate? Standard IV(A): A) precludes Parsons from entering into an independent competitive activity while still employed by Malloy. A) precludes Parsons from entering into an independent competitive activity while still employed by Malloy. B) requires Parsons to notify Malloy in writing about her intention to undertake an independent practice. C) does not require Parsons to notify Malloy of preparing to undertake independent practice under the current conditions. D) requires Parsons to obtain written consent from both Malloy and the persons from whom she undertakes independent practice. Answer is C. What happened to notifying the employer? What about written consent? WTF?
You are allowed to prepare (rent office space, etc), but have to have written permission to compete.
ah, reread it…she hasn’t started yet so it’s C.
I would’ve picked B.
It is the difference between intention to undertake and actually doing it. Even if it is off hours, you must get permission to actually start competing, but you can prepare all you want under the radar.
Ah yes, the word “preparing” is there. Tricky!
pretty good question
If she wasnt planning to do this and was “going” to do this the answer would have been D, because written consent is needed from “all parties” involved.
B would have been my first pick, but after carefully reading the question, C is the obvious choice beacuse of earlier discussed reasons. “Parsons wants to engage in independent practice”, at this time she is not required to notify her employer
She does not need to get consent is needed from “all parties”…just the employer…check book p70.
this is where i get confused, because in standard IV(B) it clearly states that when receiving compensation that competes with, or might reasonably be expected to create a conflict of interest with, their employers’ interest…written consent is needed from all parties involved. I would say that in this question she is definitely going to be receiving compensation that will result from competition with her current employer. can anyone shed a bit of light on this…
Yes, now that I actually reread it I overlooked “preparing…” the CFA is the complete opposite of the other multiple choice tests where initial instincts are generally right and overthinking questions is detrimental (i.e. SATs, GMATs). They also love to use numbers that are not respectively stated (i.e. calculation of interest expense for Company A and company B but providing the bonds for Company B and then Company A.) tricky…I always get killed on those questions.