Question

Simon Layman is a trust investment officer at a bank in a small affluent town. He enjoys lunching every day with friends at the country club, where his clients have observed him having numerous drinks. Back at work after lunch, he clearly becomes somewhat intoxicated because of his drinking habits and has affected his investment decision-making. His colleagues make a point that Simon handles business with his client in the morning because they distrust his judgment after lunch.

Based on the above scenario, discuss on Simon’s professional conduct and the impact on his employer and investment industry in general by applying the CFA Standards of Practice Handbook.

Answer 1

According to CFA Standards of Practice, Trust and sharp decision are the foundations of the investment profession. Investors must be able to rely on the statements and information and decisions provided to them by those with whom the investors have trusted their financial well-being. In the given case, Simon Layman is not following the proper code of ethics in his profession as he is unable to make proper decisions regarding investment for his clients.

Impact- We know that Investment professionals like Simon Layman, who make false or misleading or doubtful statements (in abnormal mental condition due to drinking) not only harm investors but also reduce the level of investor confidence in the investment profession and threaten the integrity of capital markets as a whole. Simon Layman is making his behavior negative for every employee, client and the institution as a whole, or the investment industry will not be tolerated.

Thanks & all the best............