Client Gift Disclosure (Schweser Practice Test Q)

DarienHacker

There are endless threads about gift disclosure rules, but I can't make sense of disclosure rules concerning material versus token gifts.

Specifically, there is a Schweser practice test problem (volume 2, test 2, question 11.3) in which a manager gets a handful of seemingly "token" client gifts (e.g. flowers and chocolates) as well as an offer to use one client's vacation condo. The vignette indicates that she discloses the token items to her employer.

The question asks what is required to be in compliance and two of the choices are:
(a) [The manager] may not accept use of the condo without prior disclosure to her employer in writing
(b) [The manager] may not accept the gifts or use of the condo without disclosing them to her employer in writing.

The correct answer is (a). I'm guessing this hinges on the use of the word "prior," which applies for material gifts that could potentially create conflicts of interest.

However, is it not true that disclosure of token items is still a requisite for compliance? I.e. ALL gifts must be disclosed, but those that are material or liable to affect objectivity must: (i) be disclosed PRIOR to acceptance; and (ii) receive PRIOR employer approval? Token items, in contrast, may be accepted and disclosed after the fact?

Any and all help appreciated!

Zestt

Try to think at it a bit logically- are you really going to disclose that a client gave you a box of chocolate, or a bottle of whiskey? The condo can possibly affect her objectivity, so it must be disclosed to their employer so they can make sure no preferential treatment is given.