- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 71. Guidance for Standards I-VII
- Subject 12. Standard IV (A) Loyalty
CFA Practice Question
Lionel Stein currently works for JHK Bank managing private clients' money. Lionel decides to change banks and manage private client accounts for RTU Bank. Just prior to leaving JHK, Lionel convinces several current clients to move to RTU with him. In addition, Lionel convinces several prospective clients who he presented to at JHK to open private accounts with RTU. Has Lionel violated the Code and Standards?
A. No, members are entitled to solicit current and prospective clients while they still work for their current employer.
B. Yes, since members are not entitled to solicit current or prospective clients while they still work for their current employer.
C. Yes, since members are not entitled to solicit current clients while they still work for their current employers (but they are entitled to solicit prospective clients while they still work for their current employers).
Explanation: Solicitation of current and prospective clients while still working for an employer is unethical and violates the Code and Standards.
User Contributed Comments 3
| User | Comment |
|---|---|
| ubei90 | No mention of a non-compete agreement? Does this not effect the answer? |
| towengreen | The prospective clients piece at first seems tricky. You've been working to create and foster this relationship then can't bring them with you if you go to another firm? Disclosure of you leaving the firm is key. If you don't mention that until you start at the new firm, you should be golden, no? |
| gyee2012 | After rereading answer C, I realized its such a bogus answer. It should not be trying to get potential clients to your new employer. The rational, if you are being paid by your current employee, you are disrupting their business CF. Why do it... you honestly should not |