Ethics question question

Matori

Suppose Jack worked for an investment bank A and participated in preparing an RFP (request for proposal) response to a corporate client. Subsequently, Jack changed jobs and is now working in investment bank B.

If B follows codes and standards, is it ok for B to put Jack to work on the same RFP? Corporate client sent it to both A and B and Jack most likely knows well what A is going to answer.

Feel free to adjust my question if you have encountered different variations of the same problem in your work or studies.

giants2010

Depends if Jack signed a non-compete agreement with bank A. This means that if Jack leaves bank A they cannot compete with them through another company (bank b) when they leave or are fired for a specific amount of time. If Jack has signed a non-compete agreement and subsequently works on the RFP he is in violation of the code and standards.

SeanWest

Jack can use knowledge gained during his work at previous employer in future assignments , if He does not take/copy any material from his old employer.

So any numbers, workings, valuations,analysis done (methods used) as long as He is able to recollect from memory, He can still use it.

Ofcourse any financial models (unless jack is able to reconstruct the models from his memory :-) ) in repect to RFP prepared at Jack's previous employers are the properties of his previous employers.

I think hence, jack does not have the problem here.

The Anticompte agreement issue belongs to Jack leaving the company A and then starting his own company and competing against Co. A , i think. Does it also apply to jack working for Company B? i think if Co. B has an Anti-compete agreement with Co-A then only Jack cant work on RFP. just a bit confused on this part though.



Edited 1 time(s). Last edit at Tuesday, August 16, 2011 at 12:41AM by vgmalu.

giants2010

I recall this is a question in the CFAI ethics text itself (although I do not recall the answer). Arguably Jack should recuse himself or not be assigned but I have low confidence in this answer. Although it is true Jack can construct models, prepare research, etc. from memory as his prior employer cannot deprive him of his skills notwithstanding a non-compete.

Can anyone verify the correct answer in the Ethics text?

busterbluth

To correct myself, it would be a violation if anticompete agreement exists between Jack and his previous employer.

Jack should disassociate himself from RFP but his firm can still carry out the reponse to RFP.


I tend to feel that even if Anticompete Agreement does not exist between him and previous employer, still he cant carry out work on RFP.



Edited 1 time(s). Last edit at Thursday, August 18, 2011 at 12:18AM by vgmalu.

thecfawannabe

In the small text given here I don't see anything about a non-compete agreement, so he should be able to write the RFP.....

be careful on these ones, they could trick you into thinking he can't compete for the biz, but in reality the client is looking for a large cap value manager, which his new employer is, but his old employer is a small cap growth manager, so they are not in direct competition. They would have to make this clear like i just did but it's easy to glaze over...

former

also remember that Jack has a responsibility to disclose to Co. B that he worked on the RFP for Co. A. sometimes they try to get you by switching up the perspective in the question. the way i worked through these was disclose everything. or think about what you would actually do, the answer is the opposite!

bkballa

I always thought you play it safe in case of conflict of Interests

A) Anti-compete agreement does not exist either with Jack or Company B
I thought Jack can't carry out the work because of his previous involvement in RFP even if he discloses, Company B can carry out RFP on their own without Jack

B) Anti-compete agreement exists between Jack and Company A
Jack cant work on RFP but Company B can apply for RFP

C) Anti-compete agreement exists between Company A and Company B
Company B cant apply to RFP

Pl. tell me in which of the cases i am wrong.