I am slightly confused with the reason given for answer C, as it purely based on the fact that the gift is the use of condo rather than the actual implication behind. If you refer to the Standards of practice book on page 22 (Standard I(B) Independence and Objectivity), example 7 clearly stated that if you disclose it, you can have two Wimblemdon tickets and the use of flat for a week. Please share your thoughts.
I am sorry, but what exactly is the issue you are having here? The condo would like an additional compensation agreement, but it can only be utilized after you get a written agreement from your employer, which would be the case for other expensive gifts too. Flowers and chocolates are not really going to question anyone about conflicts of interests.
The question is the use of condor will pretty much be the same as two Wimblemdon tickets and the use of flat for a week (or may be less). The point is how to we define whether the gift is excessive or not
Well, the issue of whether the gift is excessive or not is subjective and anything that can appear to have a conflict of interest needs to be disclosed regardless of the amount. So, I agree with you about value of the condo and the wimbledon tickets, but from the client’s side, both would appear as a conflict of interest.
Sparty419, now you can see my point. In Standards of practice book on page 22 (Standard I(B) Independence and Objectivity), example 7 clearly stated that if you disclose it, you can have two Wimblemdon tickets and the use of flat for a week. There is no need to get written consent from employer.
Interesting. Ok, I think this is a case of differentiating between a gift (maybe after achieving great returns) and additional compensation arragements (which could appear to have a conflict of interest). For the first case, you have already achieved the return, so now you are just being rewarded. It could be minimal like chocolates, or it could be something awesome, like spending a day with the client’s trophy wife I don’t know. But in each case, you will need to disclose the gifts to the employer. (in this case, no WITTEN consent). Second scenario would be where the client would give you a target and tell you that if you achieved it, you will get rewarded by spending a day with his trophy wife. In this case, you are motivated to achieve the return and you might give more importance to him that other clients. In this case, you need a written consent from employer AND the client. I think to conclude, gifts = no written consent, but disclose, additional compensation agreement = written consent from all parties involved. Would like to hear your take on this again
sparty is right. Since the gift would depend on future performance, it must be agreed upon and written down for all parties. The thought behind it is that additional compensation (the gift of the condo if good performance continues) could lead the portfolio manager to take unnecessary risks to acheive it. The gift in the past (wimbeldon tickets, the flat, and trophy wife) is cool just to tell your employer about because it happened in the past and the risks taken were justified and within the constraints of the portfolio.
Thanks I now understand fully the difference