IV. DUTIES TO EMPLOYERS

B. Additional Compensation Arrangements.

Members and Candidates must not accept gifts, benefits, compensation, or consideration that competes with, or might reasonably be expected to create a conflict of interest with, their employer's interests unless they obtain written consent from all parties involved.

Outside compensation/benefits may affect loyalties and objectivity and create potential conflicts of interest. These include direct compensations from clients and indirect compensations or other benefits from third parties.

Note: Accepting gifts is allowed, but you must inform your employer in writing before accepting.

Procedures for compliance

Members should make an immediate written report to their employer specifying any compensation they receive or propose to receive for services in addition to compensation or benefits received from their primary employer. Disclosure in writing means any form of communication that can be documented (e.g., email). This written report should state the terms of any oral or written agreement under which a member will receive additional compensation. Terms include the following:

• Nature of the compensation.
• Amount of compensation.
• Duration of the agreement.

Example 1

In an attempt to increase portfolio performance, a firm's client offers the portfolio manager an incentive, such as a free vacation. A conflict of interest exists in this case and the portfolio manager must inform the firm beforeaccepting the arrangement.

Example 2

One of your firm's clients manages a ski resort in Colorado. She has told you that as long as you are managing her assets, you are entitled to complimentary lift tickets at the resort. To be in compliance with this standard, you must report this in writing to your employer. The employer will want to ensure that this client receives no special consideration as a result of the arrangement.

Example 3

Steve sits on the board of directors of ABC Inc. As a result, he obtains unlimited membership in ABC Inc.'s services. Steve does not disclose this relationship to his employer, because he does not receive monetary compensation. Steve has violated this standard by not disclosing the benefits he receives to his employer.