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Answer: Yes, because Run accepts both the beach home offer and the family flight voucher without disclosing them to his employer.
According to **Standard IV(B) - Additional Compensation Arrangements**, CFA members must obtain written consent from their employer before accepting any gifts, benefits, or compensation that could create a conflict of interest. This includes both direct and indirect benefits, such as the beach home offer and the flight voucher. By failing to disclose and obtain consent for both offers, Run has violated Standard IV(B). The rationale emphasizes that compensation includes any form of benefit, whether monetary or non-monetary, and requires full transparency with the employer to avoid conflicts of interest.
Author: LeetQuiz Editorial Team
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John Run, CFA, manages client accounts for an investment firm. A client offers Run the use of a beach home for a week if his portfolio outperforms the benchmark by 5%. Additionally, Run serves on the board of Core Air Ltd. (Core) and receives a family flight voucher as a non-cash benefit. Run accepts both offers without informing his employer. Has Run most likely violated the Standard relating to additional compensation arrangements?
A
No.
B
Yes, solely because Run accepts the beach home offer without disclosing it to his employer.
C
Yes, because Run accepts both the beach home offer and the family flight voucher without disclosing them to his employer.
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