- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 71. Guidance for Standards I-VII
- Subject 19. Standard VI (B) Priority of Transactions
CFA Practice Question
There are 356 practice questions for this topic.
CFA Practice Question
Grant Parker, a money manager, was promised a gift of significant value from a client contingent on the performance of the coming period. Would Grant be committing an ethical violation if he were to accept?
A. Yes. Grant should not accept gifts from a client, regardless of value or performance.
B. No. As long as Grant does not tell his employers of the gift and compromise their integrity, this is not an ethical violation.
C. No. If Grant secures the permission of his employer and does not act to the detriment of his other clients in pursuit of the gift, this is not an ethical violation.
Explanation: No. If Grant secures the permission of his employer and does not act to the detriment of his other clients in pursuit of the gift, this is not an ethical violation.
User Contributed Comments 11
|DougFunny||what about independence and objectivity? wouldn`t the acceptance of the gift may seem suspicious to anyone else that this gift is disclosed?|
|JeremyMartin||i thought the CFA ethics require analysts not to accept any personal gifts that depends on future performance? hope someone could clarify|
|rvera||Considering that question states "a Significant" gift, i assume this means it is very high in value. Does that really help someone keep their objectivity?|
|kindal||Yes i am confused too but i think that the key is the term "Money Manager", which by definition does not publish any research report. So that Objectivity is not an issue. If he get the permission of his employer it's enough to pursuit the gift.|
|zed888||don't agree with this answer - a 'significant' gift in itself would definitely affect independence and objectivity, it doesn't matter if he gets permission from his employer|
|Peez||Example 8 in the CFA curriculum states: "Members and candidates may accept bonuses or gifts from clients as long as they disclose them to their employers, because gifts in a client relationship are less likely to affect a member's or candidate's objectivity and independence than gifts in other situations."|
|gill15||PEEZ has got it. If the gift is FROM THE CLIENT --- it can be of a more significant value and its good to go.
Make sure to get a HUGE clientele...
|01827||Gifts from the client cannot be contingent on performance.|
|donrose||Yeah, I though gifts couldn't be tied to performance, which is why I got this one wrong...any clarity on this?|
|DPBass88||I think the point to focus on is that these additional compensation arrangements are fair. The employer has granted permission and the other clients will not suffer because of the arrangements. Although the gift is of signficant value the gift will not take away from the managers overall performance. -Members must not accept gifts that competes with or might create conflicts of interest...pg 97 vol. 1 standard IV B.|
|ashish100||Depending on the performance! Nothing sketchy here. Just a compensation structure.|