bmaggie

An analyst working at an investment firm has a client that rents limousines. The client tells the analyst that as long as he is the client’s analyst, he can have free use of a limousine several times a year. The analyst needs to:

A) do nothing since the offer is not linked to the performance of the client's portfolio.

B) explicitly refuse such an offer.

C) inform his supervisor in writing of the offer if the analyst intends to accept the offer.

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Standard IV(B) requires that members disclose to their employer in writing all benefits that they receive in addition to their regular compensation for services they perform on behalf of their employer. They also need to get consent from their employer in writing. The written report to the employer should include the details of any written or oral agreement for extra compensation. The analyst does not have to refuse the offer.

bmaggie

Jill Marsh, CFA, works for Advisors where she manages a portfolio for a wealthy family. Marsh earns 1% of the portfolio’s value each year in the form of a commission from Advisors. The family just told her that any year the portfolio she manages earns more than a 10% return, the family will give her the use of the family’s vacation home for one week. Hirsh will comply with Standard IV(B), Additional Compensation Arrangements, if she:

A) sends an e-mail to her supervisor about the vacation home.

B) does nothing with respect to this.

C) delivers a typed memo to her supervisor about the vacation home the first time she uses it.

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Standard IV(B) requires that members disclose to their employer in writing all benefits that they receive in addition to their regular compensation for services they perform on behalf of their employer. E-mail messages qualify. As long as the agreement is in effect, she must inform her employer even if she has yet to use the potential benefit.

bmaggie

To comply with Standard IV(B), Additional Compensation Arrangements, members should do all of the following EXCEPT:

A) reject any outside compensation immediately because it is not appropriate to accept outside compensation in a business setting.

B) state the terms of oral or written agreements regarding the compensation and the duration of the agreement.

C) immediately make a written report to their employer specifying any compensation benefits they receive.

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There is no reason to reject any outside compensation immediately because it is inappropriate to accept it. However, all outside arrangements must be reported to the member’s employer.

bmaggie

Dick Bowden, a CFA charterholder, receives a free country club membership in exchange for financial advice he can offer the firm. He should:

A) do nothing; it is his business where he spends his free time.

B) reject the country club membership since it is illegal under CFA Institute rules and regulations to accept outside compensation.

C) disclose the arrangement to his employer.

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Dick should disclose the arrangement to his employer under Standard IV(B), Additional Compensation Arrangements.