Question #15
Reading: Reading 42.6 Standards of Professional Conduct Guidance for Standards VI
PDF File: Reading 42.6 Standards of Professional Conduct Guidance for Standards VI.pdf
Page: 7
Status: Unattempted
Question
Steve Copper has worked as an independent consultant for the past ten years advising companies on various ways to increase their internal efficiency and thereby increase the firm's stock price as well. Copper recently accepted a job offer from an equity research firm as a senior stock analyst. One of the firms he will be responsible for researching, Johnson Machine Tools (JMT), is also one of his consulting clients. Copper currently has a contract with JMT to provide consulting services for another six months which he plans to honor even though there are no penalties in the contract for early termination on his part. According to CFA Institute Standards of Professional Conduct, which of the following is the most appropriate action for Copper to take? Copper should:
Answer Choices:
A. terminate the contract with JMT prior to issuing any research on the company
B. disclose the consulting arrangement to clients considering JMT as an investment
C. disclose the arrangement only if he plans to renew the contract in six months. Michael Pennington Case Scenario Michael Pennington is Senior Vice President of equity investments at Alpha Investment Advisors, Inc. (AIA). He manages a team of analysts and portfolio managers and is responsible for maintaining and developing client relationships. AIA is located in Belgium and provides investment management services to high net worth individuals. Pennington is also a Level III Candidate in the CFA Program. One of Pennington's clients is the Flanders family. Pennington had a long relationship with Helmut Flanders. Before Flanders's untimely death, he gave Pennington full discretion over
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