Question #1
Reading: Reading 42.4 Standards of Professional Conduct Guidance for Standards IV
PDF File: Reading 42.4 Standards of Professional Conduct Guidance for Standards IV.pdf
Page: 1
Status: Unattempted
Correct Answer: A
Question
Jill Marsh, CFA, works for Advisors where she manages various portfolios. Marsh's godfather is an accountant and has done Marsh's tax returns every year as a birthday gift. Marsh's godfather has recently become a client of Advisors and asked specifically for Marsh to manage his account. In order to comply Standard IV(B), Disclosure of Additional Compensation Arrangements, she needs to:
Answer Choices:
A. liquidate from her personal portfolio any stocks her godfather owns and verbally tell her supervisor about the tax services
B. have her godfather cease doing her taxes
C. do neither of the actions listed here
Explanation
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. It is not unreasonable for an individual's godfather to give them a
birthday gift. Moreover, since the tax services were a regular birthday present before her
godfather became a client, this implies that they are unrelated to any investment
management services.
(Module 42.7, LOS 42: IV(B))