What can and can't I do when leaving my employer under Standard IV — Duties to Employers?

Standard IV covers Duties to Employers, with two key sub-standards: IV(A) Loyalty and IV(B) Additional Compensation Arrangements. When leaving a firm, IV(A) is the one most frequently tested.

Core Principle of IV(A):

You must act for the benefit of your employer and not deprive your employer of the advantage of your skills and abilities, divulge confidential information, or otherwise cause harm. However, this duty has boundaries — it does not require you to sacrifice your entire career.

What You CAN Do While Still Employed:

1. Look for a new job — Attending interviews, updating your resume, and negotiating with potential employers is perfectly fine
2. Make preparations to leave — You can research office space, form an LLC, or register a business name, as long as these activities don't compete with your employer or occur on company time using company resources
3. Give notice — Standard IV does not specify a notice period, but professional courtesy and any contractual obligations apply

What You CANNOT Do While Still Employed:

1. Solicit your employer's clients — While employed, you cannot contact clients to tell them "follow me to my new firm." This diverts business that belongs to your employer
2. Take proprietary materials — Research models, client lists, investment recommendations, and trade history belong to your employer. Taking copies (physical or digital) violates IV(A)
3. Misappropriate trade secrets — Your employer's proprietary investment process, algorithms, or databases are confidential

After You Leave:

Once you have departed, the rules shift:

• You may contact former clients to announce your new affiliation — client relationships are not "owned" by the firm
• You may use general knowledge and skills you developed (e.g., how to build a DCF model), but not your former employer's proprietary models
• You may not use any confidential information you retained from your former employer

Scenario — Langford Wealth Advisors

Kira Matsuda is a portfolio manager at Langford Wealth Advisors who plans to start her own RIA. While still at Langford, she:

• Registers "Matsuda Capital LLC" (compliant — preparation)
• Downloads her client contact list to a personal USB drive (violation — proprietary data)
• Tells three of her closest clients at a dinner: "I'm leaving next month, you should come with me" (violation — soliciting while employed)
• After her last day, she sends LinkedIn messages to all her former clients announcing her new firm (compliant — post-departure notification)

Exam Tip: The key time boundary is departure date. Before that date, prepare but don't compete or solicit. After that date, you can reach out to former clients using publicly available contact information. Never take proprietary files regardless of timing.

Explore more CFA ethics practice in our community section.