Date: 12.11.15 Category: Ethics & Professionalism
Meredith Rasmussen works on a buy-side trading desk and concentrates on in-house trades for a hedge fund subsidiary managed by a team at the investment management firm.
The hedge fund has been very successful and is marketed globally by the firm. From her experience as the trader for much of the activity of the fund, Rasmussen has become quite knowledgeable about the hedge fund’s strategy, tactics, and performance.
When a distinct break in the market occurs, however, and many of the securities involved in the hedge fund’s strategy decline markedly in value, Rasmussen observes that the reported performance of the hedge fund does not reflect this decline. In her experience, the lack of any effect is a very unlikely occurrence.
She approaches the head of trading about her concern and is told that she should not ask any questions, that the fund is big and successful and is not her concern. She is fairly sure something is not right, so she contacts the compliance officer, who also tells her to stay away from the issue of this hedge fund’s reporting.
Rasmussen has clearly come upon an error in policies, procedures, and compliance practices in the firm’s operations. Having been unsuccessful in finding a resolution with her supervisor and the compliance officer, Rasmussen should consult the firm’s whistleblowing policy to determine the appropriate next step toward informing management of her concerns.
The potentially unethical actions of the investment management division are appropriate grounds for further disclosure, so Rasmussen’s whistleblowing would not represent a violation of Standard IV(A).
CFA UK members have a duty to be good corporate citizens. If you find yourselves in a position where you detect or suspect inappropriate conduct, please approach the society to seek support. Contact the CFA UK Ethics Committee at firstname.lastname@example.org or the CFA Institute at email@example.com.