Lesson 5 of 6 · 13 min
Duties to employers: loyalty, outside pay and supervision
Employer cases ask whether the member served the firm faithfully until they left, got written consent for any outside pay that could conflict, and, if they supervise, made real efforts to prevent and detect wrongdoing.
In short
- IV(A) Loyalty: preparing to leave is allowed; disparaging the firm to its clients, lining up clients for a new firm, or taking client lists (even with good intentions) is not.
- Loyalty to the employer gives way when clients need protecting: whistle-blowing to a regulator about practices that harm clients is not a violation.
- IV(B) Additional Compensation: outside pay that could conflict with the employer's interest requires the employer's written consent; issuer-paid research also needs safeguards and disclosure.
- IV(C) Supervisors: oversight must be real. Remote staff, head-office audits or weak firm procedures are not excuses. Without adequate procedures or authority, decline the role in writing.
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