Case 1: the Glenarm Company Essay

374 Words2 Pages
Peter Sherman, CFA, is a financial analyst who has been working for several years in a small equity-oriented firm called Pearl Investment Management, and who is going to join another small equity-oriented management fund, the Glenarm Company. The purpose of this case is to study in what extend Peter Sherman violate the CFA Code of Ethics and Standards of Professional Conduct. We can identify several violations through this case study, and especially the duties toward one’s employer. Loyalty: Code: “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 to their employer.” Facts: First of all, while he was still working for Pearl, Peter Sherman tried to make local Pearl clients choose Glenarm in the future, and to transfer their account from Pearl to Glenarm (it can be seen as a violation of the ‘preservation of confidentiality’ of the clients, since Sherman will tell Glenarm about Pearl clients). Second of all, he took with him different folders (marketing presentations, computer programs, research material, etc.), which can be assimilated to intangible assets for Pearl. These actions would definitely harm Pearl, by depriving it of their skills and assets and divulging confidential information. How to prevent this: In order to prevent employees from divulging private information, the funds should ask their employees to sign contracts related to the “non-disclosure of private information”, especially towards competitors. As a result, they would be able to punish employees who did not keep their engagement. In some extreme cases, firms can buy the secret of their employees and managers (see Novartis…) Additional Compensation Arrangements: Code: “Members and candidates must not accept gifts, benefits,

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