{"id":868,"date":"2019-07-12T17:36:00","date_gmt":"2019-07-12T17:36:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=868"},"modified":"2025-05-19T05:54:20","modified_gmt":"2025-05-19T05:54:20","slug":"standard-4b-additional-compensation-arrangements","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/ethical-and-professional-standards\/standard-4b-additional-compensation-arrangements\/","title":{"rendered":"Standard IV(B) \u2013 Additional Compensation Arrangements"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"VideoObject\",\n  \"name\": \"Standard IV \u2013 Duties to Employers (2024\/2025 Level I CFA\u00ae Exam \u2013 Ethics\u2013Module 3)\",\n  \"description\": \"This video lesson covers Standard IV: Duties to Employers under the CFA Institute\u2019s Code and Standards. It explains loyalty, confidential information, whistleblowing, additional compensation, and supervisory responsibilities, using real-world examples and scenarios to reinforce ethical conduct expected from CFA members and candidates in the workplace.\",\n  \"uploadDate\": \"2022-08-25T00:00:00+00:00\",\n  \"thumbnailUrl\": \"https:\/\/img.youtube.com\/vi\/0jsh54Uf78I\/maxresdefault.jpg\",\n  \"contentUrl\": \"https:\/\/www.youtube.com\/watch?v=0jsh54Uf78I\",\n  \"embedUrl\": \"https:\/\/www.youtube.com\/embed\/0jsh54Uf78I\",\n  \"duration\": \"PT17M19S\"\n}\n<\/script>\n\n\n\n<p>[vsw id=&#8221;0jsh54Uf78I&#8221; source=&#8221;youtube&#8221; width=&#8221;611&#8243; height=&#8221;344&#8243; autoplay=&#8221;no&#8221;]<\/p>\n<p>Standard IV(B) \u2013 Additional Compensation Arrangements obliges members not to accept gifts, additional compensation, or consideration that competes with the interests of an employer.<\/p>\n<h2>Compliance<\/h2>\n<p>Standard IV(B) \u2013 Additional Compensation Arrangements requires members to obtain written permission before accepting gifts or additional compensation from third parties. This consent is to limit the possibility of a conflict of loyalty between employees and employers.<\/p>\n<p>Clients may offer a bonus contingent upon stated return on investment, over and beyond an investment professional\u2019s salary, or an employer-based bonus program. The nature of that client-paid contingency can result in unfair client service (see Standard III(B) \u2013 Fair Dealing).\u00a0 Therefore, this offer must be disclosed to an employer for evaluation and approval.<\/p>\n<h2>Violation<\/h2>\n<p>To prevent the violation of this standard, firms are encouraged to develop well-defined, written policies related to the acceptance of gifts or extraordinary compensation by third parties.\u00a0 Policies should outline the risk of conflict of loyalty, as well as the need to preserve Standard I(B) \u2013 Independence and Objectivity, and Standard III(B) \u2013 Fair Dealing.<\/p>\n<blockquote>\n<h2>Question<\/h2>\n<p>Hernan Martinez, a CFA member, serves Dinero Asset Management as an analyst.\u00a0 In his free time, he helps a friend make investment decisions by reviewing her portfolio.\u00a0 He accepts no fee or favor for this work.\u00a0 He has not told his employer about the help he gives his friend. With regard to Standard IV(A) \u2013 Loyalty:<\/p>\n<p>A. Martinez is in violation of Standard IV(A) \u2013 Loyalty because the standard prohibits CFA members from giving advice without disclosure to one\u2019s employer<\/p>\n<p>B. Martinez is in violation of Standard IV(A) \u2013 Loyalty because he is not accepting money for his time<\/p>\n<p>C. Martinez is not in violation of Standard IV(A) \u2013 Loyalty<\/p>\n<h4 data-tadv-p=\"keep\">Solution<\/h4>\n<p>The correct answer is C.<\/p>\n<p>Martinez is not in violation of Standard IV(A) \u2013 Loyalty because he is not assisting his friend for a fee.\u00a0 Therefore, there is no conflict in terms of loyalty to his employer over himself.\u00a0 Additionally, if he is doing this work during off-hours, then there is no conflict in terms of time-loyalty.<\/p><\/blockquote>","protected":false},"excerpt":{"rendered":"<p>[vsw id=&#8221;0jsh54Uf78I&#8221; source=&#8221;youtube&#8221; width=&#8221;611&#8243; height=&#8221;344&#8243; autoplay=&#8221;no&#8221;] Standard IV(B) \u2013 Additional Compensation Arrangements obliges members not to accept gifts, additional compensation, or consideration that competes with the interests of an employer. Compliance Standard IV(B) \u2013 Additional Compensation Arrangements requires members to&#8230;<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-868","post","type-post","status-publish","format-standard","hentry","category-ethical-and-professional-standards","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Standard IV(B) \u2013 Additional Compensation | CFA Level 1 - AnalystPrep<\/title>\n<meta name=\"description\" content=\"Standard IV(B) obliges members not to accept gifts, additional compensation, or consideration that competes with the interests of an employer.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/analystprep.com\/cfa-level-1-exam\/ethical-and-professional-standards\/standard-4b-additional-compensation-arrangements\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Standard IV(B) \u2013 Additional Compensation | CFA Level 1 - 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