bmaggie

Jacob Allen, CFA, decides he could make more money if he started his own company. Which of the following steps would NOT violate Standard IV(A), Loyalty to Employer?

A) Getting written permission from his employer to call the clients and solicit their business for his new firm.

B) Taking home the employer's buy lists.

C) Taking home his current employer's client lists, investment statements and marketing presentations.

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If Jacob gets written permission from his employer to solicit their clients (not likely, obviously) he would not be violating the Loyalty to Employer Standard.

bmaggie

When a CFA Institute member who is presently employed by a firm undertakes any independent practice, he must do all of the following EXCEPT:

A) disclose the expected duration of the services to be rendered.

B) remand a percentage (to be determined by the employee and employer) of the income earned back to the employer.

C) secure permission from the employer.

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The member is obligated to get permission from his employer if he will be in any way competing with his current employer. They must provide notification to their employer describing the types of services to be rendered, the expected duration, and compensation for the services.

bmaggie

Jack Salyers, CFA, is considering starting his own firm to compete with his current employer. He takes several actions before turning in his resignation. Which of the following actions is NOT in violation of Standard IV(A), Loyalty to Employer?

A) Jack copied the employer's computer models and other property.

B) Jack told his employer that he was considering leaving and requested that the employer write him a letter of recommendation.

C) Before leaving, Jack solicits his employer's current clients.

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Asking for a letter of recommendation is perfectly acceptable. Soliciting clients and taking the employer’s property like client lists, computer programs, etc. are not permissible.

bmaggie

Mary Hiller, CFA, is a senior analyst at a mutual fund. She is also a member of the Board of the Directors of her daughter’s Skating Club. She is often asked for advice about the management of the club budget and about possible short-term investments, but she is not paid for this advice. She does not undertake any research to answer these questions, providing information based only on the general practices of the mutual fund at that moment. The only benefit she receives is a free monthly membership for her daughter that would usually cost $182. What should she do before making any recommendations, in order to comply with the CFA Institute requirements?

A) Obtain prior permission from her employer.

B) Inform her current clients about her outside consulting.

C) Consult only on her free time and do not accept any benefit greater than $100.

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According to Standard IV(A) Loyalty to Employer, it is the employee’s duty to inform the employer about any type of outside consulting service, including duration and any compensation. Only after receiving permission from her employer, can she proceed.

bmaggie

Pamela Gee is a portfolio manager. She is planning to establish her own money management firm. She has already informed her employer, Branford, Inc., about her plans. In her remaining time at Branford, she can:

A) start the registration of her new company.

B) solicit Branford colleagues but not Branford clients.

C) inform her current clients about her resignation and let them know how to reach her, in case any problems arise in the future.

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The only action that will not breach Standard IV(A) Loyalty to Employer, is to start the registration of her new company.

bmaggie

Which of the following statements is most correct under the Code and Standards?

A) Consent from the employer is necessary to permit independent practice that could result in compensation or other benefits in competition with the member's employer.

B) CFA Institute members are prohibited from undertaking independent practice in competition with their employer.

C) Members are prohibited from making arrangements or preparations to go into competitive business before terminating their relationship with their employer.

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Members are not prohibited from making arrangements or preparations to go into competitive business before terminating their relationship with their employer. CFA Institute members are not prohibited from undertaking independent practice in competition with their employer provided they have consent from their employer. Members must provide notification to their employer describing the types of services to be rendered, the expected duration, and compensation for the services.

bmaggie

Bill Valley has been working for Advisors, Inc., for several years, and he just joined CFA Institute. Valley’s sister just received a large bonus in the form of stock options in Zephyr, Inc. Valley’s sister knows nothing about financial assets and offers Valley a week at her holiday home each year in exchange for Valley monitoring Zephyr and the value of her stock options. In order to comply with the Code and Standards, Valley needs to inform Advisors of:

A) both the use of the holiday home and his sister's options.

B) nothing since no money is involved and it is a favor for a family member.

C) the compensation in the form of the use of the holiday home only.

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According to Standard IV(A), Loyalty to Employer, Valley must inform Advisors of his outside consultation even if it is not for monetary compensation. According to Standard VI(A), Disclosure of Conflicts, Valley must also disclose possible conflicts of interest, and his sister’s position qualifies.

bmaggie

An analyst belongs to a nationally recognized charitable organization, which requires dues for membership. The analyst has worked out a deal where he provides money management advice in lieu of paying dues. Which of the following must the analyst do?

A) Must treat the charitable organization as his employer.

B) Resign from the position because the relationship is a conflict with the Standards.

C) Nothing since he is not an employee of the charitable organization.

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An employee/employer relationship does not necessarily mean monetary compensation for services. If the analyst is performing services for the organization, then the analyst must treat the position as if he were an employee.

bmaggie

Nick O'Donnell, CFA, unsuspectingly joins the research team at Wickett & Co., an investment banking firm controlled by organized crime. None of the managers at Wickett are CFA Institute members. Because of his tenuous situation at Wickett, O'Donnell begins making preparations for independent practice. He knows he will be terminated if he informs management at Wickett that he is preparing to leave. Consequently, he determines that "if he can just hang on for one year, he will likely have a client base sufficient for him to strike out on his own." This action is:

A) a violation of his fiduciary duties.

B) a violation of his duty to disclose conflicts to his employer.

C) not a violation of his duty to employer.

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O’Donnell is required to obtain consent from his employer if he is attempting to practice in competition with his employer. Merely undertaking preparations to leave, which do not violate a duty, is not a violation of the Code and Standards.

bmaggie

Janet Thompson, CFA, is employed as an analyst by Nationwide Securities. According to CFA Institute Standards of Professional Conduct, which of the following statements about Thompson's duty to Nationwide is FALSE? Thompson must refrain from:

A) engaging in any conduct that would injure Nationwide.

B) making arrangements to go into a competitive business before terminating her relationship with Nationwide.

C) engaging in independent competitive activity that could conflict with the business of Nationwide unless she receives written consent.

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Standard IV(A) permits Thompson to make preparations to go into a competitive business before terminating her relationship with Nationwide provided that such preparations do not breach her duty of loyalty.