Ethics_4 - ETHICS IN INVESTMENT 1 Standard 4 Duties to Employers A Loyalty Must act in interests of employer and not deprive employer of benefits

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ETHICS IN INVESTMENT 1
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Standard 4: Duties to Employers A. Loyalty Must act in interests of employer and not deprive employer of benefits of skills and efforts, divulge information or cause harm to employer 2
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Guidance: Loyalty Act in interests of employer and give latter full benefit of skills etc. Do not harm employer in any way Confidentiality Outside work for compensation: allowed if employer fully informed of all aspects and agrees to all aspects. Leaving employer: must act in employer’s best interests right up to point of leaving. No taking of confidential information, soliciting of clients prior to leaving, misappropriation of IP (models, reports etc.) and client databases. 3
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Guidance: Loyalty Use of skills, experience and contacts gained at previous employer not prohibited Restraints of trade often used by employers Personal and employer’s interests secondary to protection of client interests and integrity of capital markets. Therefore, “whistleblowing” allowed if for above purpose. 4
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Example 1: 5 Denise Jones is working as an unpaid intern at Novelto, where she is tasked with conducting an analysis of Jenco Engineering and Construction. She does not have any contractual obligation to Novelto, and plans to take her research notes with her when she starts to work at Indigo Finance, which has just offered her permanent employment. According to Standard 4(A), Jones does not have the right to take her research material with her. She should also allow Novelto to act on her report before Indigo does.
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Example 2: 6 Bill Goosen is a senior portfolio manager at GML, but has decided to start his own asset management consultancy. Goosen does not let any clients know about his, nor does he plan to take any of his employer’s models or investment recommendation reports. However, he does not plan to erase the client list on his personal laptop, and is intending to use a copy of one of GML’s marketing presentations as a template for his own presentation. Goosen will be in breach of Standard 4(A) unless he erases the client list on his laptop when he leaves, and refrains from using (or copying) his employer’s marketing presentation. Under this standard he is not allowed to retain, take or use any of his employer’s information or property once he resigns.
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Example 3: 7 Jake Murdoch recently joined Highwatch Asset Management after 12 years with W&P. Murdoch contacts some of his former clients, some of whom are interested in following Murdoch to his new employer. Murdoch will be in breach of Standard 4(A) if he uses a client contact list that he brought with from his former firm, or if he had a specific contractual agreement with W&P not to contact former clients. However, if he is merely acting upon his knowledge of clients gained at W&P, he is entitled to contact them. There is no prohibition on the use of knowledge, skills and experience gained at a former employer.
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Example 4: 8
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This note was uploaded on 06/01/2011 for the course FIN 3026W taught by Professor Drtoerien during the Summer '09 term at University of Cape Town.

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Ethics_4 - ETHICS IN INVESTMENT 1 Standard 4 Duties to Employers A Loyalty Must act in interests of employer and not deprive employer of benefits

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