Question #33
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: 14
Status: Correct
Correct Answer: A
Question
Nick O'Donnell, CFA, unsuspectingly joins the research team at Wickett & Co., an investment banking firm controlled by organized crime. None of the managers at Wickett are CFA Institute members. Because of his tenuous situation at Wickett, O'Donnell begins making preparations for independent practice. He knows he will be terminated if he informs management at Wickett that he is preparing to leave. Consequently, he determines that "if he can just hang on for one year, he will likely have a client base sufficient for him to strike out on his own." This action is:
Answer Choices:
A. not a violation of his duty to employer
B. a violation of his duty to disclose conflicts to his employer
C. a violation of his fiduciary duties
Explanation
O'Donnell is required to obtain consent from his employer if he is attempting to practice in
competition with his employer. Merely undertaking preparations to leave, which do not
violate a duty, is not a violation of the Code and Standards.
(Module 42.7, LOS 42: IV(A))