Standard IV: Duties to Employers
About this episode
Standard IV of the CFA Institute Code of Ethics and Standards of Professional Conduct, Duties to Employers, governs the working relationship: loyalty to the firm that employs you, the extra compensation you are and are not allowed to accept, and what you owe once you are the one supervising. In a two host format, one host explains the material while the other plays a fictional exam candidate, and together they reason out loud through the questions the exam is built around: what you can take with you when you leave a firm and what stays behind, when a side arrangement quietly crosses the line, and why “I did not know” is not a defense for a manager. Using fully fictional scenarios, they work Loyalty (IV-A), Additional Compensation Arrangements (IV-B), and Responsibilities of Supervisors (IV-C), to help you practice reasoning through a vignette rather than guessing at it.
In this episode
Standard IV, Duties to Employers, governs the working relationship, and this episode works through its three sub-standards with fully fictional scenarios.
Standard IV(A), Loyalty, covers acting for the employer's benefit in work matters. The hosts reason through the line between preparing to leave a firm and competing while still employed. A recurring distinction is memory versus records: under the Standards, you keep your own skills, experience, and memory, while the firm's files, client lists, and proprietary work stay behind. For exam purposes they also cover how the Standards treat the duty of loyalty as applying regardless of whether a non-compete was signed, and how whistleblowing is analyzed in terms of its purpose.
These are points about how the CFA Institute Standards analyze the scenarios for exam purposes, not legal advice. Actual employment, whistleblower, and restrictive-covenant rules depend on applicable law and the specific facts.
Standard IV(B), Additional Compensation Arrangements, addresses gifts, bonuses, and benefits that could conflict with the employer's interest. The episode works through the rule that such arrangements require written disclosure and written consent from all parties, and the distinction between a backward-looking token of thanks and a forward-looking incentive that could bend judgment.
Standard IV(C), Responsibilities of Supervisors, covers the duty to make reasonable efforts to prevent and detect violations. The hosts reason through why “I did not know” is not a defense when there was no adequate compliance system, why reasonableness is judged at the time and not with hindsight, and why a supervisor should decline a role in writing if the system in place is inadequate.
The episode points listeners to the free 90 question practice exam at tottenprep.com.
What this episode covers
- Standard IV(A) Loyalty: preparing to leave versus competing, and the memory-versus-records line.
- Standard IV(B) Additional Compensation Arrangements: written disclosure and consent from all parties.
- Standard IV(C) Responsibilities of Supervisors: why “I did not know” is not a defense.
- The timing-and-property test for leaving-the-firm scenarios.
Frequently asked questions
What does CFA® Standard IV cover?
Standard IV of the CFA Institute Code of Ethics and Standards of Professional Conduct covers Duties to Employers: IV(A) Loyalty, IV(B) Additional Compensation Arrangements, and IV(C) Responsibilities of Supervisors.
Can you take your client list when you leave a firm?
Under the CFA Institute Standards, and for exam purposes, this episode reasons through the distinction with fictional scenarios: you can use your own memory, general industry knowledge, and skills, while the firm's records, files, and client lists are treated as the employer's property. Timing and property are the two things the scenarios turn on. This is exam-prep framing, not legal advice.