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Basic Question 2 of 7
Sherman, a CFA charterholder, started to work for Pearl Investment Management five years ago. He was Pearl's primary research analyst for emerging markets. Recently Sherman decided to take a very attractive employment opportunity, offered by Glenarm, a competitor of Pearl's. In preparation he started to contact and solicit several local Pearl clients after business hours, using social calls. He also contacted a few potential Pearl clients, and a few that Pearl had rejected. In the last week at Pearl, Sherman made digital copies of various materials to take with him to Glenarm.
II. He should not plan to leave Pearl to go into competitive business right away.
III. He should not solicit "potential" clients of Pearl for Glenarm, even after work hours.
IV. He should not try to encourage existing clients of Pearl to switch to Glenarm.
Sherman violated Standard IV (A) - Loyalty because while he was employed by Pearl,
I. He should not seek alternative employment.
II. He should not plan to leave Pearl to go into competitive business right away.
III. He should not solicit "potential" clients of Pearl for Glenarm, even after work hours.
IV. He should not try to encourage existing clients of Pearl to switch to Glenarm.
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Learning Outcome Statements
evaluate practices, policies, and conduct relative to the CFA Institute Code of Ethics and Standards of Professional Conduct;
explain how the practices, policies, and conduct do or do not violate the CFA Institute Code of Ethics and Standards of Professional Conduct.
CFA® 2025 Level II Curriculum, Volume 6, Module 45.