AuthorTopic: Whom do you have to tell about referral fees?
Fidelity
@2015-03-01 11:29:19
A is a portfolio manager. His old friend B refers to As firm high-level individuals. In return, A allows B to play golf at As country club for each new client referred. According to VI (C) Referral Fees, A is required to disclose the arrangment with B to:

a. his employer, all clients and all prospective clients
b. prospective clients referred by B
c. his employer and to prospective clients referred by B.

My take would be (a) since the standard VI (C) says:

Members and Candidates must disclose to their employer, clients, and prospective
clients, as appropriate, any compensation, consideration, or benefit received from,
or paid to, others for the recommendation of products or services.

According to a training material provider, the correct answer is - surprisingly- (c). Explanation says that you need to disclose to employers and to affected clients.

Could someone explain why you should not tell to existing clients? I think the supposedly correct answers contradicts with the standard.
Alicechau
@2015-03-17 11:01:53
I think I figured out the answer. B refers the clients to A therefore there is no need to disclose to his (current clients) because there is no conflict between them. Only his employer and future clients that this may affect. I may be wrong but the standard says disclose to blank as appropriate.

CFA Discussion Topic: Whom do you have to tell about referral fees?

To post a new topic or reply to a topic, please log in or register for a free user account.

I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz