Reading 5: The Glenarm Company-LOS b 习题精选 2011, conduct, action, center, style

土豆妮

Session 2: Ethical and Professional Standards: Application
Reading 5: The Glenarm Company

LOS b: Explain the appropriate action to take in response to conduct that violates the CFA Institute Code of Ethics and Standards of Professional Conduct.

 

 

Glenarm Case Study (Refer to CFA Institute's Standards of Practice Casebook for details.)

Peter Sherman, CFA, has recently joined Glenarm Company after spending 5 years at Pearl Investment Management. He is responsible for identifying potential Latin American investments. Previously, Sherman held jobs as consultant for many Latin American companies and had plans to continue such consulting jobs without disclosing anything to Glenarm.

After resigning, but before leaving his employment at Pearl, Sherman had encouraged Pearl customers to move their accounts to Glenarm. He contacted accounts Pearl had been soliciting for business. He also contacted potential clients that Pearl had rejected in the past as too small or incompatible with the firm's business. Furthermore, he convinced several of Pearl's clients and prospects to hire Glenarm after he joined the company. He also identified materials from Pearl to take with him, such as:

1. sample marketing presentations he had prepared
2. computer program models for stock selection
3. research materials on companies he had been following
4. a list of companies recommended by Sherman for potential investment, but which were rejected by Pearl
5. news articles for potential research ideas

 

Under the obligation to act in the best interest of the employer while still an employee, Sherman's actions constitute the following violations except:

A) solicitation of potential clients of Pearl--violation of Standard IV(A).

B) solicitation of clients while still employed by Pearl--violation of Standard IV(A).

C) leaving Pearl to join a possible competitor--violation of Standard IV(A), Loyalty to Employer.

---

 

There is no violation if the member joins a competitor without compromising his duty to his previous employer.

Others are incorrect because: Soliciting clients of Pearl, while in its employment, damaged Pearl's business, a clear violation of Standard IV(A); solicitation of potential clients is a violation for the same reason; it is a violation of Standard IV(A) to misappropriate employer's property which results in a damage to employer's business.

土豆妮

Glenarm Case Study (Refer to CFA Institute Standards of Practice Casebook for details.)

Peter Sherman, CFA, has recently joined Glenarm Company after spending 5 years at Pearl Investment Management. He is responsible for identifying potential Latin American investments. Previously, Sherman held jobs as a consultant for many Latin American companies and had plans to continue such consulting jobs without disclosing anything to Glenarm.

After resigning, but before leaving his employment at Pearl, Sherman had encouraged Pearl customers to move their accounts to Glenarm. He contacted accounts Pearl had been soliciting for business. He also contacted potential clients that Pearl had rejected in the past as too small or incompatible with the firm's business. Furthermore, he convinced several of Pearl's clients and prospects to hire Glenarm after he joined Glenarm. He also identified materials from Pearl to take with him, such as:

1. Sample marketing presentations he had prepared.
2. Computer program models for stock selection.
3. Research materials on companies he had been following.
4. A list of companies recommended by Sherman for potential investment which were rejected by Pearl.
5. News articles for potential research ideas.

Which of the following statements concerning Sherman's actions is CORRECT?

A) Sherman did not violate any Standard by taking away the news articles from his previous employer, Pearl, for potential research ideas.

B) Sherman did not violate Standard IV(A) by soliciting clients that were rejected by Pearl either because they were too small or unsuitable as long as winning their business did not adversely affect Pearl.

C) Sherman did not violate Standard IV(A) since members can engage in independent consulting practice as long as their employer policy does not specifically prohibit it.

---

Standard IV(A) addresses Loyalty to the Employer and depriving the employer of profit opportunities is a violation of this standard. Because Pearl had no interest in rejected clients and had turned their profit potential down already, soliciting them is not a violation.

Taking away news articles and computer program models is a violation of Standard IV(A) because Sherman took away employer property, which could be used by Pearl or Sherman's replacement. Engaging in independent consulting practice is a violation IV(A) because Sherman not only compromised his independence and objectivity, but also did not obtain explicit written consent of his new employer, Standard IV(B), Additional Compensation Arrangements.

---

Sherman's attempt to lure away clients from Pearl while he was still employed at Pearl is:

A) a violation of Standard IV(A) because it undermined Pearl's business and its profit opportunities and caused damage to Pearl's business.

B) not a violation of Standard V(A) because it was conducted "after hours" on Sherman's own time.

C) not a violation of Standard IV(A) because they would have followed Sherman to his new firm anyway, and no harm to Pearl was done as a result.

---

An attempt, successful or not, to lure away existing clients of the current employer is a violation of Standard IV(A) as it causes damage to the employer's business.

Others are incorrect because: "After hours" solicitation is not an excuse if it damages the employer's business; the fact that Pearl's clients were agreeable does not absolve Sherman of Standard IV(A) violation; even if Pearl's clients would have followed Sherman to his new employer anyway, Sherman, by soliciting such clients, damaged his employer's business. The focus is on Sherman's actions.