|Author||Topic: ethics from AN mock 7|
|Christopher Kim, CFA, is a research analyst for Batts Brothers, an investment banking firm in New York. Kim follows the energy industry and has frequent contact with industry executives. A CEO ofa large oil and gas corporation that has previously employed Batts Brothers to underwrite
a stock issue has invited Kim to his office to discuss a secondary offering of the company's stock. The CEO wants Batts Brothers to underwrite the stock issue. As an incentive to place the issue quickly with institutional investors, the CEO offers Kim the opportunity to fly on his private jet to his ranch in Texas for an exotic game hunting expedition if Kim's firm can complete the underwriting within one month. According to CFA Institute Standards of Conduct, Kim:
A. must not accept such lavish benefits in order to maintain his objectivity.
B. must obtain written consent from Batts Brothers before accepting the invitation.
C. may accept the invitation without consent ifhe submits a statement disclosing the value of the trip to Batts Brothers when he returns.
I initially put A because it does seem kinda lavish but it states that the firm wants them to do the underwriting so I guess it doesn't matter.
But, the answer is B.
AnalystNotes Ethics sections are really really tricky.
|It is lavish but it becomes up to the investors who actually read the report what to make of it. If it states, an exotic hunt then I would be hesitant but if it just said "paid for dinner at XYZ restaurant" I would understand.
Just operate under the assumption that as long as there's written disclosure it should be acceptable.