Session 2: Ethical and Professional Standards: Application
Reading 5: The Glenarm Company
LOS a: Critique the practices and policies presented.
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 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:
- sample marketing presentations he had prepared
- computer program models for stock selection
- research materials on companies he had been following
- a list of companies recommended by Sherman for potential investment, but which were rejected by Pearl
- news articles for potential research ideas
Upon Sherman's joining Glenarm, which of the following acts did NOT violate the standards?
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A) |
He allowed Glenarm to advertise the fact that they had hired a portfolio manager who was a CFA charterholder. | |
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B) |
He misappropriated news articles from his old employer. | |
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C) |
He did not give Glenarm a written statement disclosing his independent consulting practice and details of activities that resulted in compensation since they had already been approved by Pearl-his previous employer. | |
Dissemination of Sherman's CFA credentials as a portfolio manager is not a violation as long as Standard VII(B) is adhered to. Others are incorrect because: Independent consulting without employer's consent is a violation of Standard IV(B), Additional Compensation Arrangements, Standard VI(A), Disclosure of Conflicts, Standard I(B), Independence and Objectivity, and Standard IV(A), Loyalty to Employer. Misappropriation of employer property and soliciting Pearl’s clients while still employed are also violations of Standard IV(A), Loyalty to Employer. | 
发表于 2010-4-6 15:27
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