Duties to Employers - IV(B) Additional Compensation Arrangements

LOS

What is the primary directive of Standard IV(B) Additional Compensation Arrangements? Members and Candidates 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.

Why does CFA Institute have a rule regarding outside compensation arrangements? Outside compensation/benefits may affect loyalties and objectivity and create potential conflicts of interest.

Does Standard IV(B) Additional Compensation Arrangments only cover direct compensations or also indirect compensations (like game tickets)? The Standard includes both direct compensations from clients and indirect compensations or other benefits from third parties.

a. demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations of issues involving issues of personal integrity

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b. distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards

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c. recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct

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If you receive a gift from a client without prior notification, what should you do? Members should make an immediate written report to their employer specifying any compensation they receive.

If a client tells you in advance that they plan to give you a gift, what should you do? Can you accept the gifts from your client? Yes, accepting gifts is allowed, but you must inform your employer in writing before accepting.

What is an acceptable form of disclosure when it comes to communicating with your employer that you have, or plan to, accept gifts from a client? You can use any form of communication that can be documented (e.g., email).

What three pieces of content should the written disclosure of a gift contain? The written report should state the terms of agreement under which you will receive additional compensation. Terms include the following: 1. Nature of the compensation. 2. Amount of compensation. 3. Duration of the agreement.