Harry Markham’s Loyalty Dilemma: A Case Study | Detailed Academic Analysis
Harry Markham’s Loyalty Dilemma Case Study
This case study is based on the case of
Harry Markham’s Loyalty Dilemma. In early 2012, when he completed his Masters
of Finance and CFA program from the reputed institutes, he started working
for a Firm, named Investing Consulting Associates (ICA), the firm’s job was
to give investment advice to pension funds. The conflict came down when he grew
his concern about how the public sector pension fund liabilities were being
valued? If he valued the debts by using the rules, he learned in the CFA
program, the liabilities go twice as high as reported. This conflict would be
solved if he was allowed to do as he had learned in his studies. But the
problem was, it was not worth taking this issue to the firm or to the clients
because they were not interested in this and the worst thing was the Board was
not willing to hear such things that the liabilities were undervalued, and the
firm was not willing to go against the desire of the board
This dilemma caused a conflict in
Markham’s loyalty between the firm, board, clients, and those who hired his firm for
financial advice. It was very difficult to decide, whether to go with the firm
or against it. It was unethical for Markham to ignore reality and maintain misleading records for clients. Also, it was very risky to tell the reality to
clients and the Board of trustees because it was not good news for them. It was
going to make them sad, that the liabilities are very much higher than represented.
But if he follows the rules and Code of Ethics, then he was bound to prepare
the true record and maintain competence and integrity. So for the upcoming
meeting with the board of trustees, Markham was deciding whether to raise this issue in
the meeting or not. And for that, he was very confused
These standards and code of ethics are
only related to this case:
Code of Ethics and Standards:
“Use reasonable care and exercise
independent professional judgment when conducting investment analysis, making
investment recommendations, taking investment actions, and engaging in other
professional activities”
Standard for Professional conduct:
“A member must not knowingly make public
statements that are false, misleading, or fraudulent, concerning his/her
psychological services or professional activities or those of persons or
organizations with which he/she is affiliated. Accordingly, a member must not
misrepresent directly or by implication his/her professional qualifications
such as education, experience, or areas of competence”
Conduct as Members and Candidates in the CFA Program:
“Members and Candidates must not engage in
any conduct that compromises the reputation or integrity of CFA Institute or
the CFA designation or the integrity, validity, or security of the CFA
examinations”
Conflicts Of Interest:
“Disclosure of Conflicts: Members
and Candidates must make full and fair disclosure of all matters that could
reasonably be expected to impair their independence and objectivity or
interfere with respective duties to their clients, prospective clients, and
employer. Members and Candidates must ensure that such disclosures are
prominent, are delivered in plain language, and communicate the relevant
information effectively”
Duties of Employers:
“Responsibilities of Supervisors: Members
and Candidates must make reasonable efforts to detect and prevent violations of
applicable laws, rules, regulations, and the Code and Standards by anyone
subject to their supervision or authority”
Recommendation:
All the standards are about providing fair
statements to the board and clients irrespective of the company’s personal interests.
For the long-term benefits of clients and the board of trustees, Markham or any
person, who is facing this situation should prepare the statement according to
the rules of accounting principles, maybe it will increase the liabilities and
cause a serious problem for the board, but it will be much better than making
them happy by a fraud. And Markham should present this problem in front of the
Board of Trustees in the upcoming meeting and to the firm also. Maybe there
will be no action taken by them but Markham must fulfill his duty. As a
CFA, this is my duty of Markham to follow the rules and regulations. I have
provided this recommendation based on loyalty to the nation and
loyalty with my own self. If Markham in this situation goes with the firm and
provides misleading information. It is a trait of the country, CFA Regulatory,
customers, and his own self for being ignorant of the truth.
Bibliography
CFA Institute. (2014, 07 01). cfainstitute.org.
Retrieved from CFA Institute:
https://www.cfainstitute.org/-/media/documents/code/code-ethics-standards/code-of-ethics-standards-professional-conduct.ashx
John Minahan, C. R. (2012, october 01). Harry
Markham's Loyalty Dilemma (A). Retrieved from MIT SLOAN SCHOOL OF
MANAGEMENT:
https://mitsloan.mit.edu/LearningEdge/Leadership/HarryMarkhamA/Pages/Harry-Markham-Loyalty-Dilemma-A.aspx
THE COLLEGE OF PSYCHOLOGISTS OF ONTARIO. (2017,
march 24). STANDARDS OF PROFESSIONAL CONDUCT (2017). Retrieved from
College of Psychologists of Ontario:
file:///D:/STANDARDS%20OF%20PROFESSIONAL%20CONDUCT%20(2017)%20With%20Pop%20Up%20Practical%20Applications%20February%201,%202018.pdf
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