Assume there is some analyst for Company A. One of other companies, call it company B (no connections between companies, no coverage of B by A, no anything, they simply don’t know each other and work in differen industries:)), asked the analyst for some one-time paid consulting services. The qestion is: to be able to perfom the consulting services and conform to code of standards the analyst has to
A. get approval from his employer (company A) B. get approval from both companies C. does not have to inform company A as the services are independed, rendered in non-working hours and do not conflict with his employer.
Given the different industries part, as long as it doesn’t conflict with duties at firm A, I think it’s ok. So C.
It is strange that firm B would want the consulting of the guy from firm A given they’re in different industries.
This could be your church finance committee wanting you to attend a meeting for 50 bucks compensation on sunday afternoon. Doesn’t compete with employer, doesn’t affect your ability to serve employer, don’t have to disclose.
I also thought it was C but the answer (qbank) says its B.
I can understand that additional compensation should be disclosed to employer but can’t understand why the analyst needs the permission form the company which itself proposed the deal. Ridiculous!
Is this from a CFAI question or an external provider?
If it is from an external provider, i would discount the possibility that they actually have the right answer to their own question. In the very least, because the rules as clear as they may seem are many times subjective and open to different interpretations.
Why, for example, should Schweser or Elan, know better than me, the appropriate defintion on a violation considering we all source our information from the same page?
Yea, the deal is that you only have to inform employer when your in competition/or it is very time consuming and will affect your job. Monetary or non-monetary compensation doesnt matter. You have to get written permission from your employer (and I am 90% sure the person giving you the new side job).
My only thing I forgot is do you also need to get permission from the person giving you the job? I think so…
My thought was that if it is investment-related, you need to get permission, regardless of if the companies are related or not.
There was a mock exam that had a question about disclosing / not disclosing an paid investment advisory position for a church, and the person had to disclose it (but didn’t have to disclose being on the BOD of an unrelated company)
I think the idea might be that if you’re recommending investments for Organization B while working for Org A, you might recommend good investments for B, but not A.
Yeah I saw another one where someone did not have to disclose being on the board of his brother’s company (unrelated field) and getting paid a small fee for it, but he did have to disclose an unpaid investment advisory role for a symphony where he got some free concert tickets. Of course they phrased the question which does he “most likely” have to disclose and the answer was symphony so can’t be 100% sure how they would answer in isolation.