CFA Practice Question

There are 291 practice questions for this topic.

CFA Practice Question

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.

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.
Correct Answer: III and IV.

A member can make preparations to leave. While still being employed a member must continue to act in the current employer's best interest, and must not engage in any activities that would conflict with this duty. Preparations can be done but the preparations should not breach the employee's duty of loyalty. In this case, Sherman should not try to solicit Pearl's current and potential clients, even if it's done after hours and in a social context.

User Contributed Comments 0

You need to log in first to add your comment.