CFA Standards of practice - Duties to employers

Question 1

Explain how CFA Members and Candidates should deal with “Loyalty”

Answer 1

In matters related to their employment, MaC must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information or otherwise cause harm to their employer

Question 2

8 specificities arise regarding loyalty

Answer 2

1. MaC must always place the interest of the client above those of their employer
2. this standard is not meant to be a blanket requirement to place employer interests ahead of personal interests
3. MaC should enter a dialogue with their employer about balancing personal and employment obligations
4. Employer Responsibilities
5. Independent practice
6. Leaving an employer
7. Whistleblowing
8. Nature of employment

Question 3

Give some details about employer responsibilities (loyalty)

Answer 3

MaC are encourage to provide their employers with a copy of the code of standards. Senior management has to devise incentive arrangements that do not encourage unethical behaviour

Question 4

Give some details about Independent practice (loyalty)

Answer 4

MaC should abstain from independent competitive activity that could conflict with the interests of their employer

Question 5

Give some details about leaving an employer (loyalty)

Answer 5

The circumstances of each situation must be reviewed. MaC who are contemplating leaving must not contact clients for purposes of soliciting their business for the new employer. Skills and experience that an employee obtained while employed are not confidential or privileged information

Question 6

Give some details about Whistleblowing (loyalty)

Answer 6

MaC personal’s interests are secondary to protect the integrity of capital markets and the client’s interests

Question 7

Give some details about Nature of employment (loyalty)

Answer 7

MaC should determine whether they are employees or independent contractors

Question 8

Give the 4 elements that MaC can compliance regarding “loyalty”

Answer 8

1. Competition policy, MaC must understand restrictions placed by employers
2. Termination policy, MaC should clearly understand this
3. Incident-reporting procedures, MaC should be aware of policies related to whistleblowing
4. Employee classification, MaC should understand their status within their employer firm

Question 9

Explain how CFA Members and Candidates should deal with “Additional compensation arrangements”

Answer 9

MaC must not accept gifts, benefits, compensation or consideration that competes with or might reasonably be expected to create a conflict of interest with their employer’s interests unless they obtain written consent from all parties involved

Question 10

Explain how CFA Members and Candidates should deal with “Responsibilities of supervisors”

Answer 10

MaC must take reasonable efforts to detect and prevent violations or applicable laws, rules, regulations and the code of standards by anyone subject to their supervision or authority.

Question 11

Give 2 elements that MaC can compliance regarding “Responsibilities of supervisors”

Answer 11

1. Code of ethics and compliance procedures, separating these will reduce boilerplate language that can make the underlying principles incomprehensible
2. Adequate compliance procedures, a supervisor complies when he establishes and enforces compliance procedures to prevent violations