Reading 5: The Glenarm Company - LOS b - Q1 details, style, black, class

mayanfang1

Q1. 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)   leaving Pearl to join a possible competitor--violation of Standard IV(A), Loyalty to Employer.

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

mayanfang1

答案和详解如下：

Q1. 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)   leaving Pearl to join a possible competitor--violation of Standard IV(A), Loyalty to Employer.

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

Correct answer is B)

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.

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