I have a question in the following question from schweser practice exam 1, 2 exam afternoon page 102
Q10, Kim, CFA is a research analyst for Batts Brothers an investment banking firm in NY.Kim follows the energy industry and has frequent contact with industry executives. A CEO of a large oil and gas firm that has previously employed Batts Brothers to underwrite stock issues has invited kim to his office to discuss the secondary offering of the company's stock. The CEO wants Batts Brother to underwrite the company's stock issue. As an incentive to place the issue quickly with institutional investor. The CEO offers Kim the opportunites to fly on his private jet for an exotic game haunting if Kim's firm can complete the underwriting within a month. According to CFA standard and code.
A) must not accept such lavish benefit in order to maintain his objectitiy
B) must obtain written consent from Batts brother before accepting
C) may accept the invitation without consent only if he discloses the trip to Batts brother before accpeting.
The answer is B. But i think in this sitatuon, the extra benefit has nothing to do with his work, is a luxury holiday and he shouldn't accpet it even with consent from employer? Please share your thoughts.作者: Kiakaha 时间: 2011-7-13 16:07
I suppose completing the underwriting fast does not affect the quality of it? If so, I don't see any wrong with offering incentives to have it done fast.
I think the key here is the job scope of underwriting. If it was for a research job, definitely a no no for me. Correct me if I'm wrong.作者: ramdabom 时间: 2011-7-13 16:07
I think the point being driven home is that any benefits must receive written permission from the employer before being accepted, whether it's big game hunting, hotel accomodations or lunch at an upscale restaurant. I haven't come across a question yet that's reached the limits of lavish benefits if permission is granted by the employer.
Now if accepting the benefit conflicts with another standard, even if written permission is received that would be a different story.作者: Mechanic 时间: 2011-7-13 16:07
i have got another example, please see schewer book 1 page 79, in this case, even the person has disclosed the additional offered for a dinner to the employer, the answer said that the analyst needs to decline the offer because the dinner is expensive ... so i am not sure about it.作者: jim8z3 时间: 2011-7-13 16:07
thanks, I think I kinda get what u mean, BONUS related to standard 4B additional compensation arrangement. whereas the gift desribed in the other example refers to standard 1b independence and objectivity which might not be accept if is it too expensive .....作者: disiz64 时间: 2011-7-13 16:07
yes, i think your thinking is correct ....... thanks for your discussion.
