Lionsgate Limited & Bank of Australia Case: Tony Hill and Team

CFA Level III Ethics
#1

  1. Did Hill violate the Code and Standards by asking his team to join him at his new firm?

    A. No

    B. Yes, because Hill was the supervisor of the team

    C. Yes, because Hill owed a duty of loyalty to his current employer

A is correct. It is not a violation for Hill to ask his team to join him at his new firm. The Guidance to Standard IV(A): Duties to Employers, Loyalty states, “A departing employee is generally free to make arrangements or preparations to go into a competitive business before terminating the relationship with his or her employer as long as such preparations do not breach the employee’s duty of loyalty.” Asking his team to join him at his new firm does not breach the duty of loyalty. However, any planning and activity on behalf of the new firm (such as the leasing of office space and individual registration) must be done by Hill and the individuals joining him on their own time.

My issue with this question is we know for sure that Standard IV(A) does not allow to solicit your employer’s clients while still employed with the firm because you have duty of Loyalty to the firm, but why is soliciting the firm’s employees okay? I am thinking the same reasons why soliciting clients is bad should apply to soliciting employees as well.

#2

This suggests that you, as an employee, can be easily replaced by your employer but not your client’s money. Doesn’t sound realistic at all. :slight_smile:

In all seriousness, I agree it’s confusing.

#3

I do agree! And for some employers, losing key employees can be as damaging as losing clients if not more.