A portfolio manager forwards a client list to her personal email "just for reference" before her last day. She has not solicited anyone. She has already violated Standard IV(A).
IV(A) Loyalty. You must not deprive your employer of the advantage of your skills or divulge confidential information. Independent practice for compensation requires written consent from the employer covering the type of services, expected duration, and compensation. Skills and experience are yours, but client lists, models, research, and contact files belong to the employer. Pre-resignation solicitation is prohibited. Public information memorized after departure is fair game; downloaded files are not. Whistleblowing to protect the public interest can override loyalty when the activity is illegal or unethical.
IV(B) Additional Compensation Arrangements. No gifts, benefits, compensation, or consideration from anyone other than the employer that could create a conflict, without written consent from all parties. A client offering a bonus for outperformance counts; you must disclose and obtain employer consent in writing before accepting.
Common mistakes
- Treating Standard IV as a non-compete. It is not; you may join a competitor freely, but you cannot take firm property or solicit before resigning.
- Believing disclosure cures conflicts under VI(A). Disclosure plus management is required; disclosure alone is not a defense if the conflict still tainted the recommendation.
- Allowing personal trades ahead of client trades under VI(B). The correct order is clients, employer, personal, never the reverse.
Bottom line
- Standard IV: act in the employer's interest; you may join a competitor, but never take firm property, files, or clients, nor solicit before resigning
- IV(B): obtain written consent from all parties (employer and client) before accepting outside compensation
- Standard V: build a reasonable basis, distinguish fact from opinion, and retain records a seven-year minimum
- Standard VI: disclose all conflicts in plain language; trade priority is clients, employer, personal, with clients given adequate opportunity first
Exam shortcut
When the vignette has a departing employee, look for three specific acts: pre-resignation solicitation, copied firm files, or post-departure use of confidential lists. Any one triggers IV(A). When two disclosures are made and one is omitted, that is a Standard VI(A) violation regardless of how complete the other disclosures are. Selective disclosure fails.
The full lesson (about 1,668 words, 11 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- code and standards
- guidance i-vii
- application l3
- asset manager code
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