must not accept gifts, benefits, compensation, or consideration that competes with or might

The standard reasonably be expected to create a conflict of interest with their employer’s interest unless
they obtain written consent from all parties involved

B. Additional compensation arrangements

Obtain written consent from employer before accepting compensation or other benefits
Guidance
must act for the benefit of their employer and not deprive their employer of the advantage from third parties
of their skills and abilities, divulge confidential information, or otherwise cause harm to
their employer
The standard Recommended procedures Should make an immediate written report to their employers

Must not engage in conduct that harms the interests of the employer
Employer responsibility
Not require M&C to subordinate important personal and family obligations to their work

Abstain from independent competitive activity that could conflict with employer's interests
the types of services
the expected duration of the service
the compensation for the services
must make reasonable efforts to ensure that anyone subject
to their supervision or authority complies with applicable laws, rules, regulations, and
The standard the Code and Standards
Independence practice
not relieve supervisory responsibility
Provide notification to employer, obtain consent from employer in advance
Delegation
instruct subordinates methods to prevent and detect violations

Make reasonable efforts to detect violation of laws, rules, regulations, and Codes &
Continue to act in employer's best interest when planning to leave Standards
Detection procedures
Must
Erase/return to employer the work performed on behalf of firm unless receiving written Leaving an employer still not detect: not violated
permission from firm Guidance

meet industry standards

Contact existing/potential clients prior to leaving for soliciting their business Must not
Standard IV: Duties to employers
regulatory requirements
is acting contrary to employer's interest to comply with duties to the market and clients
Must understand what constitutes an adequate compliance system
requirements of the Code & Standards
integrity of capital market
Whistleblowing A. Loyalty the circumstances of the firm
clients permitted only if the intent is clearly aimed at protecting

Guidance Make reasonable efforts to see that appropriate compliance procedures are established,
not for personal gain documented, communicated to covered personnel
C. Responsibilities of Supervisors
Compliance procedures
employees vs. independent contractors promptly initiate investigation, from employee's statements

depend on: working hours, facilities, etc. Nature of employment reporting misconduct

follow the terms of agreement warning the employee to cease the activity
In case of employee's violation
should ensure the details in noncompete agreement are clear and fully explained before Competition policy take steps to ensure that the violation will not be repeated
signing

place limits on employee's activities

follow the resignation process when leaving the employer Termination policy

increase the monitoring of employee's activities

should be aware of their firm's policies of whistleblowing Incident-​reporting procedures

Bring an inadequate compliance system to senior managers' attention & recommend

part time Recommended procedures corrective action
Inadequate procedures

full time If clearly can't discharge responsibilities because of absence of compliance system, decline
classification structure in writing to accept responsibilities
outside contractor Employee classification
Enforcement of non-​investment-​related policies
etc.
Firm: adopt a code of ethics
policies apply to each employee class
Adequate compliance procedures
Recommended procedures
Implementation of Compliance Education and Training

Establish and Appropriate Incentive Structure