kim226

Nancy Korthauer, CFA, has launched a new hedge fund called the Korthauer Tautology Fund but has had trouble hiring analysts who are CFA charterholders as well as with finding clients. She offers a $15,000 incentive bonus to any charterholder who joins the firm with over $1 million in committed client investments. Which of the following interpretations of the Code and Standards is most accurate?

A) A member or candidate may not solicit current clients away from their current employer.

B) A member or candidate may arrange for current clients to switch to the Korthauer Tautology Fund provided the member or candidate refuses to accept the incentive bonus.

C) A member or candidate may arrange for current clients to switch to the Korthauer Tautology Fund provided clients are informed of the incentive bonus.

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A member or candidate may not solicit current clients away from their current employer under Standard IV(A) "Loyalty."

kim226

Nicholas Brynne, CFA, develops a trading model while working for CE Jones, an investment management firm. By working on the model at home from his personal computer, Brynne is able to devote additional work hours. Although the trading model is successful, Brynne losses his job in a company restructuring, and decides to start his own practice using the trading model. Nicholas is most likely:

A) not in violation of the Standards because the trading model was created using his home computer.

B) in violation of the Standards because he did not have permission to build the trading model using his home computer.

C) in violation of the Standards because he did not receive permission from his employer to keep or use the files after employment ended.

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Brynne is in violation of Standard IV(A) "Loyalty." Employer records include items stored in any medium including home computers.

kim226

Which of the following statements regarding employee/employer relationships is NOT correct?

A) An employee is someone in the service of another.

B) A written contract may or may not exist between employer and employee.

C) There must be monetary compensation for an employer/employee relationship to exist.

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Monetary compensation is not a requirement of the employee/employer relationship.

kim226

Theresa Hatcher, CFA, is making arrangements to establish her own investment advisory business before terminating her relationship with her current employer, Elite Brokers, Inc. Elite is a small company consisting of only six investment professionals and a small support staff. According to CFA Institute Standards of Professional Conduct, which of the following activities is least likely a violation of Hatcher's duty to Elite?

A) Hatcher leases office space, furniture, and other equipment for her new business.

B) Hatcher solicits Elite's clients before her termination of employment at Elite.

C) Hatcher engages in secret negotiations with two other investment professionals and her administrative assistant to leave Elite in order to join her new business.

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Standard IV(A) permits Hatcher to make preparations to begin a new practice, such as leasing office space, furniture, and other equipment, but not to engage in the other activities that may violate her duty to employer.

kim226

Which of the following statements is most correct concerning a member’s obligation to his or her employer under the Code and Standards?

A) Members are prohibited from making arrangements or preparations to go into competitive business before terminating their relationship with their employer.

B) Members are prohibited from undertaking independent practice in competition with their employer.

C) Consent from the employer is necessary to permit independent practice that could result in compensation or other benefits in competition with the member's employer.

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There is no blanket prohibition against independent practice in competition with a member’s employer. The member must obtain permission from the employer. Members may make preparations to go into a competitive business, but may not solicit clients of the employer as long as members are still employed by the employer.

kim226

Which of the following activities will least likely constitute a violation of Standard IV(A), Loyalty?

A) Contacting your current clients and asking them to "come with you" when you resign from your current employer.

B) Conspiracy to bring about a mass resignation of other employees.

C) Consulting on your own time and obtaining written permission from your employer.

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Consulting on your own time and obtaining written permission from your employer does not constitute a violation of Standard IV(A).

kim226

Bob Douglas, CFA, is considering leaving his current employer to compete in the same field. He did not sign a non-compete clause when he was hired. He may:

A) begin competing with his current employer as long as the employer has been informed of Douglas' future intentions.

B) may not prepare to compete, begin competing, or anything related to competing with his current employer.

C) plan and prepare to compete with his current employer, but not begin competing until his resignation is effective.

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Douglas may plan and prepare to compete with his current employer, but may not begin competing until his resignation is effective or he gets permission from his employer. Members must provide notification to their employer describing the types of services to be rendered, the expected duration, and compensation for the services.

kim226

All of the following activities might constitute a violation of Standard IV(A), Loyalty to Employer, EXCEPT:

A) misuse of confidential information.

B) solicitation of the employer's clients prior to termination of employment.

C) solicitation of the employer's clients following termination of employment.

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Solicitation of the employer’s clients prior to termination of employment would constitute a violation of Loyalty to Employer, but solicitation of clients following termination would not.

kim226

When providing outside services, a member should provide all of the following information to her current employer EXCEPT:

A) the compensation she will receive.

B) a promise to remit an agreed-upon percentage of the proceeds to the current employer.

C) the types of services to be provided.

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She should provide information about the type of services, the compensation arrangement and the expected duration of the project.

kim226

Analysts who undertake an independent consulting practice while employed must get permission from their employer and should disclose all of the following EXCEPT:

A) the anticipated duration of the service to be rendered.

B) the clients contact information.

C) the compensation or benefit to be received.

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The Member or Candidate is not required to disclose confidential information about his independent clients.