标题: Ethics Question need explanation [打印本页] 作者: dkishore1 时间: 2011-7-11 15:12 标题: Ethics Question need explanation
Hi Guys,
Putting here one Ethics question, Please explain the correct answer...
Jack Schleifer, CFA, is an analyst for Brown Investment Managers (BIM).
Schleifer has recenrly accepted an invitation ro visit the facilities of ChemCo, a
producer of chemical compounds used in a variety of indusrries. ChemCo offers
ro pay for Schleifer's accommodations in a penthouse suitc at a luxury hotel and
allow Schleifer ro use the firm's private jet ro rrave! ro its three facilities located
in New York, Hong Kong, and London. In addition, ChemCo offers rwo tickets
ro a formal high-society dinner in New York and a small desk clock with the
ChemCo logo. Schleifer declines to use ChemCo's corporate jet or ro allow the
firm ro pay for his accommodations but accepts the clock and the tickets ro the
dinner (which he discloses ro his employer) since he will be able ro market his
firm's mutual funds ro other guests at the dinner. Has Schleifer violated any CFA
Institute Standards of Professional Conduct?
A. Yes.
B. No, since he is using the gifts accepted ro benefit his employer's interests.
C. No, since the gifts he accepted were fully disclosed in writing ro his
employer.作者: lc26mizzou 时间: 2011-7-11 15:12
Did someone replace your "r" key with the "t" key??
I think it's C because of disclosure.
Btw, superstitious people would be angry if you gave them a clock for a present.作者: MonkeyBusiness 时间: 2011-7-11 15:12
I copy this question from Schweser Study notes and they are saying correct answer is A and explanation is that violation of Standard I(B) independence and objectivity. They mentioned that Since it is a formal high-society dinner, the tickets are most likely expensive or hard to come and influence his future research in favour of ChemCo.
I was also thinking correct answer is C if this dinner doesn't affect his independence.作者: Kiakaha 时间: 2011-7-11 15:12
Sticking with A, make sure that you remember that you aren't using this in real-life situations many times. These are all hypothetical and they are black and white. If CFA says expensive tickets may sway your judgment, even if you know that your own personal judgment would not be swayed by these tickets, you have to say it is a violation. Whether or not that is the case in the real world doesn't make a difference on this exam. I saw someone's post recently that said something to the extent of "forget what you see analysts do on a daily basis and only think of it from the lens of the CFAI until this exam is over."作者: homie 时间: 2011-7-11 15:12
I remember this from the book. The answer is A.
You can't accept any gift that might reasonably affect your independence or objectivity regardless of the reason or if you disclose.作者: Flok 时间: 2011-7-11 15:12
Is disclosing to his employer equates he has obtain permission?
I(B) states even though member/candidate should avoid accepting gift that may affect their independence, it also states that member/candidates must disclose the gift so that their employer is able to assess the situation.作者: jim8z3 时间: 2011-7-11 15:12
revenant
the quote you gave is correct. However, it applies for gift from CLIENTS, where standard is more linient since gift from clients can be as part of compensation.
Chemco is not a client, but a corporation wanting to have favorable coverage so the bar is set much higher. Agree with job71188 and CzarHC for their arguments --> answer A作者: studyn 时间: 2011-7-11 15:12
Don't confuse gifts from entities with gifts from clients.
If you are getting a gift from a company you are analyzing be more strict with the rule regarding gifts. If the gift is from a client, you disclose it as additional comp so the employer can judge the effect.作者: trogulj 时间: 2011-7-11 15:12
I see. So, even if the employer force him to go, it would be a violation of the standard?作者: FVPV 时间: 2011-7-11 15:12
The employer can force him to go, but either Schleifer or BIM would have to pay for it to remain within the code and standards.作者: leadcfa 时间: 2011-7-11 15:12
after all this discussion I guess even if employer force him still it is violation because even in that case his research would not be independent for the investor point of view and it will be biased and we know that clients interest are on first priority than employer of self interest.
Am I true ?作者: manasib 时间: 2011-7-11 15:12
NeerajDBA
Well, your are touching on a general topic: the grey overlapping area of employee's freedom to act vs employer's responsibility.
In this area, the CFAI is somewhat vague, and does not have a clear, consistent, explicit framework for candidates to reason, at least in my opinion.
It does touch upon it in many areas: responsibility of the supervisors, group research expressing an opinion different from individual team member's, employee's action when aware of illegal or at least unethical activities within the firm and outside, conflict of interest,...
The following is purely my own conjecture put together.
- CFAI seems to acknowledge the limited freedom of action an individual employee has, so it has at many points guides: one should ENCOURAGE firms to (develop procedure, retain dok,whatever..)..., not insisting that one's firm HAS to have such and such so that the individual can be in conformance with the standard.
- It seems to indicate that you try your best to avoid, help others to be aware, do within your power to dissassociate. If forced, make sure to keep your own integrity. Worst case, resign if you don't think you can keep your integrity.
- I have seen examples/cases where the following actions are recommended on the top of my head (not necessary in escalating scale)
+ get compliance/legal advice.
+ inform your supervisor.
+ inform your management
+ document your own actions and thinking.
+ inform CFA
+ inform SEC
+ disassociate yourself from the acts, ask to be reassigned.
If if is serious enough, consider resign.
One last word, the standard is an ETHICAL guideline, not hard and fast rules.
Just my two cents.
