Hi all, a quick question on Ethics please, am a little confused here:
In questions, where a business man offers a paid trip to an analyst to visit one of his processing plants - which of the below 2 should be analyst’s right course of action to avoid violating CFA standards:
Turn down the offer to avoid conflicts of interest; OR
Accept the offer, but explicitly disclose in the report the details and value of the trip.
I believe option 1 is correct, however i have seen both options marked as correct in different sources of study materials.
i would go with option 2. It aint necessary to turndown the offer outrightly. If the offer doent affect your objectivity and independence you can accept the offer, but you have to inform your employer in writing about this. If he too agrees with the compensation and thinks it is appropriate to accept the offer you can accept it otherwise reject it. Others please correct me if I am wrong here.
I believe the details of each case in the question will guide you to A or B. For example, a question I had recently seen ( I believe the 2013 mock exam the CFA institute has up) had given the correct choice as B. The reasons being, other analysts were invited to this trip and because this facility was in a remote area, turning down the offer and making your own accomodations for the tour would be very hard.
However, there could be a question where it would ask “A CEO of a major multinational company has invited John Doe, CFA on the company’s private plane for a view of the facilities and afterwards tickets to a playoff game” or something. In that case, I believe the correct answer would be A if an alternative to make your own way to the facility, tour it, ask your questions then leave was not available.
There’s also a statement in the ethics studies where it it states it is best to avoid even appearances of conflict of interest or phrased similarly.
Option 2 is correct, But for option 1 you need to have some information about the trip and who are the beneficiary… It is not necessary to turndown the offer . If the offer dont affect your objectivity and independence you can accept the offer, but you have to inform your employer in writing about this.