A CFA charterholder, Ben Carter, is a portfolio manager. He is preparing to switch employers. His current employment contract includes a non-compete clause and a clause stating that all client lists and proprietary models developed during his employment are the property of the firm. Before resigning, Ben downloads his client list, copies his proprietary financial models, and saves several client presentations he personally developed, intending to use them at his new firm. Which CFA Institute Standard is Ben most likely violating?
- AStandard V(C) Record Retention
- BStandard VI(B) Priority of Transactions
- CStandard IV(A) Loyalty to Employer
- DStandard I(D) Misconduct
Show answer & explanationAnswer & explanation
Correct answer: C. Standard IV(A) Loyalty to Employer
By downloading client lists and proprietary models, and copying client presentations developed during his employment, Ben is depriving his current employer of the advantage of their property and potentially breaching confidentiality. This directly violates Standard IV(A) Loyalty to Employer, which requires members to act for the benefit of their employer and not to cause harm by misappropriating confidential or proprietary information.
Why the other options are wrong
- A. This standard concerns retaining records to support analysis, not the appropriation of employer property when changing jobs.
- B. This standard concerns personal investment transactions and is not relevant here.
- D. While this could fall under misconduct, Loyalty to Employer is a more specific and direct violation regarding the misuse of employer property and information.
Standard IV(A) Loyalty to Employer (Termination)
Members and Candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm, especially when transitioning between jobs.
- Do not take employer property (client lists, models) upon leaving.
- Do not solicit clients or prospective clients before leaving, unless specific agreements allow.
- Protect employer's confidential and proprietary information.
Memory trick: Leaving: Loyalty, No Stealing, Clean Break.