OK, going through ethics now. When does an analyst need WRITTEN consent from the employer? For independent practice, additional compensation, gifts and referral fees you have to disclose, yes, but which one do you need consent for and specifically when should the consent be in WRITING? Also, when should the disclosure be in WRITING? (now that I think about it)…
Not really answering your question but do you mind me asking how exactly are you going through ethics? Has anyone through the standards of practice handbook?
I went through it last year for Level 1 a few days before the exam and it’s very long and I’m not gonna do it again. Most of the examples are the same anyway if I remember correctly. I’m going through Ethics from Schweser now. Just the outline of each standard and the guidance and recommendations. Not going through the actual cases, pressed for time here. Same with Soft Dollars and Research Objectivity.
I can confirm that you need to get it in writing for independent practice. Just read it today. Others not sure.
I would say the anyhting you mention that would/could create conflct of interest with employers interest needs written consent But we need to be careful also with regard to independence and objectivity, where written consent is useless. So I would say (and correct me if I am wrong) When I am to recieve something I should judge: 1. does it influence my indep. and objec.? -> if yes, do not accept 2. does it create conflict of int. with employers int.? -> if yes, disclose and recieve consent 3. is it somehow related to what I do for my employer? -> if yes, disclose 4. is it unrelated - no disclosure necessary
I read over this last night. You need written permission when you are going to receive any form of compensation. Disclosure is required in any instance of extra work so your employer can judge whether your work outside the firm will affect your work inside the firm.
Schweser doesn’t think so , always: This is one of the answers Standard IV(A): Loyalty to Employer requires written permission from both the employer and the consulting customer if the work involves competition with the employer. An example of an instance NOT requiring permission would be if a CFA charterholder who works for a broker wishes to write grants for a nonprofit foundation. In such case, he need not get permission, nor does he need to disclose the compensation. This Standard applies for work that provides either monetary or nonmonetary compensation. (Study Session 2, LOS 5.b)
do you need written consent when your client gives you money for doing a good job? or do you just need to disclose it?
ryanwtyler Wrote: ------------------------------------------------------- > do you need written consent when your client gives > you money for doing a good job? or do you just > need to disclose it? You just need to disclose it.
I agree to disclose it only, and if there is a chance it will repeat next year, recieve consent
pfcfaataf Wrote: ------------------------------------------------------- > I agree to disclose it only, > and if there is a chance it will repeat next year, > recieve consent if you know it, can you tell me what page that’s on? the part about repeating
CFAI book 1 page 75 Example 1
i maybe oversimplfying, but here’s the scenarios i remember: (1) if its a client reward ascribed to PAST performance, disclosure only is necessary. (E.G. you had a great year last year, enjoy these baseball tickets) (2) Arrangement with a client to hit target returns in the future, written permission required. (E.G. every year you beat the S&P, i give you $10 grand in cash) (3) Doing side work for another firm, or working your own portfolio management business on the weekened, written permission required (anything that competes with the employers, permission is a no brainer) (4) Doing work thats unrelated to your job and getting paid for it (for example working as a yoga instructor on the weekends) no disclosure or permission req’d
great examples smiley important to be aware of the difference between 1) disclosure “oh by the way I’m working on saturdays as a yoga teacher” 2) getting written approval beforehand sneaky but important
Also, whenever you disclose something or get approval for something it has to be written…
I think Smiley has soem good ones. Do you need written consent to take a model, etc to a new job? Think I remember that one. I guess that goes along with Loyalty comment above…
Here are the references I can find in readings 2, 3 and 4. All page references are to the CFA text. Page 70, Duties to employers. “…they must not take records or files to a new employer without the written permission of the previous employer.” Page 75, Example 1 “Whitman violated Standard IV(B) by failing to inform his employer in writing of this supplemental, contingent compensation arrangement.” The definition of Standard IV(B) also states that “…unless they obtain written consent from all parties involved.” So it seems the client also needs to provide consent in writing. Page 77, “A member or candidate with supervisory responsibility should bring an inadequate compliance system… the member or candidate should decline in writing to accept supervisory responsibility until the firm adopts reasonable procedures…” Page 100, Example 2 “…Handley has violated Standard VI© by not disclosing the referral arrangement at Central Trust Bank to his clients… The disclosure should include the nature and the value of the benefit and should be made in writing.” Page 147, Soft dollar standards. Disclosure in writing to clients that additional information regarding Soft Dollar Standards is available on request. Pg170, Research Objectivity Standards. Covered employees should annually state in writing that they understand and follow the policies regarding ROS.
The+1Guy Wrote: ------------------------------------------------------- > Here are the references I can find in readings 2, > 3 and 4. All page references are to the CFA text. > > Page 70, Duties to employers. “…they must not take > records or files to a new employer without the > written permission of the previous employer.” > > Page 75, Example 1 “Whitman violated Standard > IV(B) by failing to inform his employer in writing > of this supplemental, contingent compensation > arrangement.” > > The definition of Standard IV(B) also states that > “…unless they obtain written consent from all > parties involved.” So it seems the client also > needs to provide consent in writing. > > Page 77, “A member or candidate with supervisory > responsibility should bring an inadequate > compliance system… the member or candidate should > decline in writing to accept supervisory > responsibility until the firm adopts reasonable > procedures…” > > Page 100, Example 2 “…Handley has violated > Standard VI© by not disclosing the referral > arrangement at Central Trust Bank to his clients… > The disclosure should include the nature and the > value of the benefit and should be made in > writing.” > > Page 147, Soft dollar standards. Disclosure in > writing to clients that additional information > regarding Soft Dollar Standards is available on > request. > > Pg170, Research Objectivity Standards. Covered > employees should annually state in writing that > they understand and follow the policies regarding > ROS. This is great, thanks.
The+1Guy Wrote: ------------------------------------------------------- > The definition of Standard IV(B) also states that > “…unless they obtain written consent from all > parties involved.” So it seems the client also > needs to provide consent in writing. That makes sense actually, practically speaking you would have to open a new fund in order to change styles.
jmac01 Wrote: ------------------------------------------------------- > I think Smiley has soem good ones. > > Do you need written consent to take a model, etc > to a new job? Think I remember that one. I guess > that goes along with Loyalty comment above… i believe on taking a model - you may not take it, even if you were 100% responsible for creating it. you CAN, however, RECREATE the model from memory. Also, i believe if you get written consent, you can take it… would appreciate if someone else chimed in on this one, just my belief, not 100% sure…