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Case Study Discussion- Harry Markham Dilemma

Case Study Discussion- Harry Markham Dilemma

Several parts of the code of ethics and professional conduct standards apply to Markham’s dilemma. First, CFA analysts should act with diligence and reasonable basis. The members of the CFA must exercise diligence and display independence in analyzing investments and when making investment recommendations. CFA members are required to have a reasonable and adequate basis supported by enough research and investigation for investment recommendations. Investment recommendations should not be rushed but done carefully to ensure that the recommendations given are the most appropriate and beneficial to the clients (Minahan & Reaves, 2012). Markham should exhibit diligence and show reasonableness when analyzing the ICA investments.

The second part of the code of ethics that applies to Markham’s dilemma is loyalty. According to the CFA code of ethics, members must show loyalty to both the employers and the clients. CFA members are supposed to act for the benefit of their employer and not deprive the employers of the advantage of their knowledge. In addition, the members should be loyal to their clients; they are supposed to act with reasonable care and practice prudent judgment (Minahan & Reaves, 2012). CFA members must act for the benefit of the clients. For instance, Markham must act for the benefit of the board of trustees and other stakeholders who may rely on his professional financial recommendations.

Financial analyst professionals have the duty of telling the clients what they do not like to hear when there is deception in the financial information that may bring problems in the future. The professionals must tell the truth because it is their duty and in accordance with the standards of professional conduct (, 2006). Keeping quiet about the deception of the financial information would amount to the violation of standards of professional conduct, which could lead to the revocation of their membership. It is important for professionals to tell the clients the bitter truth to save themselves from the future blame they may be levelled against (, 2006). Keeping silent could lead to more problems, and the end result could be the organization’s collapse, so it is better for the professionals to take all the risks and inform the clients about the truth of the financial information.

References (2006). Code of ethics for professional accountants. Retrieved from

Minahan, J & Reaves, C. (2012). Harris Markham’s Loyalty Dilemma (A). MIT Sloan Management.


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In Harry Markham’s Loyalty Dilemma, Markham, an investment advisor for pension funds, is torn about whether or not to tell the board of trustees of the pension fund he is advising that he believes the value of their projected liabilities are actually much larger than what the actuaries say they are. The actuaries’ valuations rely on what Markham believes to be an inflated discounted cash flow rate of 8%, a rate which is consistent with the Government Accounting Standards Board (GASB) rules. Economists and financial analysts like himself, however, believe that low-risk pension cash flows should be discounted at a low-risk rate, say 3% to 4% in the current environment. Confronted once again by the differing viewpoints between economists and actuaries on how to value liabilities, Markham wonders what, in light of the CFA Code of Ethics and Standards of Professional Conduct that he attests to on an annual basis, are his duties and responsibilities as a professional. Does he also wonder to whom he owes his loyalty? To the board of trustees of the pension fund, considered to be the client by many of his coworkers? To his firm? To the pensioners themselves, whose financial future rests on the long-term health of their pension?

Case Study Discussion- Harry Markham Dilemma

Case Study Discussion- Harry Markham Dilemma

I want to get you to think about how you might practice values-based leadership in a business setting.

Your analysis should include:

1. Why is Harry Markham so conflicted?

2. Why do we have codes like the following in business?

Code of Ethics
Standards of Professional Conduct
3. What do you think Harry Markham should do?

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