What is too much of a gift? - Mock

CFA Level II
#1

The first vignette has Prem offering to pay for food, hotel, and transport while Matthew is in Sri Lanka visiting companies. Yet the answer states that this is not likely to violate his independence and objectivity? Now I’m not going to argue whether this is right or wrong because this is straight from the CFA. But how do we decide what is too much?

#2

No idea.

However, the point of this test is not to assess your judgment about what’s too much and what isn’t; it’s to assess whether you know what to do when it’s too much, and what to do when it isn’t. Thus, they’ll make it clear whether the gift is too much or not: it’ll be either a baseball cap, or else a two-week skiing vacation in Aspen.

Fret not.

#3

A two week skiing vacation in Aspen is not all it’s cracked up to be.

But judgement comes if there’s an obvious conflict of interest. An airline that gives you two first class tickets to try them out (when you’re an analyst that covers airline stocks) is reasonable. A casino operator giving you two first class tickets is not reasonable.

A government asking you to travel to see them should pay all expenses. Putting you up in a nice hotel in a convenient loction. A kilo of blow as a welcome gift is not.

#4

I thought it was a violation to accept food, hotel and transport. I thought the idea was that you should pay your own way if possible.

#5

Me too. If you add all of food, hotel, and transport together it’s going to be more than a really nice expensive dinner that could be seen as wining and dining. But I think the lesson here is more about how it looks rather than the amount. If it looks like wining/dining/partying, then that is not acceptable.

#6

Thanks, Ethics sucks, I am doing Ethics all day to day, hopefully I am not sacrificing other subjects

#7

In the same item set there was the arrangement that the analyst would direct brokerage for any of the tea related investments through the broker in exchange for the arrangement of the trip. Why is this allowable?

#8

Think of it as the average income in the US is like $35k? assuming people are paying off school loans, cars, rent/mortage, maybe even kids/family. buying food is probably within their budget or anything that’s like a $100 in value. But spending $1000 on vacation or $500 for a hockey game is probably to lavish.

so you can use that as your baseline.

#9

RayJay - Don’t understand, they are not just buying food, they are buying airline, hotel and food. I would assume the trip would be over 1000.