Ethics*Conflicts*Referral Fees ruling, 139, understand, copyright, standards

Micholien

help me understand something if you have a minute:
checkout last example on pg 139 of standards handbook (will not post in order to respect copyright).
okay, here’s where i need a ruling…
haven’t both parties violated standard vi(c)? shouldn’t both parties involved in a referral agreement be obligated to disclose?

Siddimaula

I am assuming the question that you are referring to is Brady Securities Inc and Lewis Brothers one. The question talks about the action of White, White violates ethical standards because he did not disclose the referral fee arrangement. Question does not ask about the actions of Harold Hill, moreover we do not know anything about conversation between Harold hill and Diane Branch, we certainly know what white did was against ethics.

dyga

yes, that is the example that i’m referring to. we do know that hill recommended white “without qualification”, wouldn’t an appropriate qualification or modifier be to mention the referral agreement established between the firms? why does it all fall on white?

koba

Harold Hill and Diane Branch were friends, Diane wasn’t the client of Harold in other words Harold didn’t have any fiduciary duties. In case of White, White definitely had ‘fiduciary duties’ towards clients (Diane). Any non disclosure of conflicts should be treated as violation.