Confict of Interest

Confict of Interest

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If you all would indulge me, I would like opinions from current practitioners with regard to conflicts of interest, particularly:

- Multiple clients in the same industry / marketplace etc. that would generally be considered competitors
  (I assume this can be a constant evaluation process for firms that specialise)

- If the owners or partners in a firm were also active investors in businesses (or the firm itself an investor)

When can these present situations of conflict of interest and how can the conflict be resolved?

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By Stuart.thomson
29th May 2015 06:24

Multiple clients in the same industry is specialist knowledge not a conflict of interest. You have a duty to your clients re confidentiality but that's different.

All partners are de facto investors in their own practice so that should not be a concern either.

Partners investing in their clients is a conflict. If it is a loan then I think their institute will have an issue. When do they call in the receiver (sorry administrator)? If it is equity then I think the institute may have an issue also but are they able to influence the company with their equity? Normally <5% in a public quoted company is considered ok and there are some very old companies where the auditors must have a share (so normally buy one share). All depends othe circumstances (eg did they invest in a third party which makes the investment decisions without them (eg pension)?).

If there is a conflict then it must be managed or cease to act. Lots of ways of doing this - the most obvious is a different partner - but if the conflict is too widespread then I would be looking at substance over form (i know its not accounting but the phrase is apt) and ceasing to act.

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