CFA Institute

FAF NewsletterSource: Financial Analysts Journal, Vol. 31, No. 5 (Sep. - Oct., 1975), pp. 82-84Published by: CFA InstituteStable URL: http://www.jstor.org/stable/4477866 .

Accessed: 15/06/2014 08:33

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact support@jstor.org.

.

CFA Institute is collaborating with JSTOR to digitize, preserve and extend access to Financial AnalystsJournal.

http://www.jstor.org

This content downloaded from 185.2.32.106 on Sun, 15 Jun 2014 08:33:45 AMAll use subject to JSTOR Terms and Conditions

FAF Newsletter Mildred M. Hermann, Editor

Annual Report The future will be the better judge of the relative importance of the events of the year 1974- Robert D. Hedberg, C.F.A. 75 in the affairs of the Federation, financial analysts, and the investment community than

FAF Chairman, 1974-75 any of us. From my perspective as Chairman for the year, it seemed primarily the time to implement and develop goals that the Federation set in past years.

The Self-Regulation Program, adopted with high hopes in late April 1974, accounted for much of the implementing activity of 1974-75, both for the forty-five societies that elected to participate in the program and for the Federation.

During the fourteen months following the adoption of the program by the FAF delegates, the societies exposed the idea to their members, revised their by-laws to make individual membership in the Federation possible for disciplinary purposes, amended their codes and standards to conform to the Federation's, held elections in which members were asked to accept or reject the proposal, and upon certification of the members' vote, distributed Member's Agreements and Member's Initial Statements to their regular and junior members so that the legalities might be properly observed.

The result is, admittedly, a mass of paperwork. But within the year the legal hurdles were negotiated; some 8,400 men and women have or soon will be enrolled as Fellows and Juniors of the FAF under the Self-Regulation Program. It is no small achievement, attained almost entirely thanks to the leadership, commitment, ability, and overtime help of every society president, officer, and director. There is no way that I could possibly overstate my appreciation for their support and assistance. They were full-time partners in all that has been attained.

The major grief of the .year was our inability to persuade the leaders of the New York Society of the viability of the FAF Self-Regulation Program. I believe the program has the strength and durability to survive and, with whole-hearted cooperation from our profession, to set a needed pace in discipline and in standards of professional conduct for the benefit of the investing public.

Despite the rejection for now of the Self-Regulation Program by the New York and Rochester societies, a number of the members of both societies have chosen to become Fellows and Juniors of the FAF. They and the C.F.A.'s in both societies make up a group of about 1,600 people who have willingly submitted themselves to self-regulatory systems. They along with the membership of the forty-five electing societies mean that some 10,000 analysts, 71 per cent of the 14,000 in the Federation, have chosen to pursue the way of self- regulation.

In addition, as part of the implementation of the Self-Regulation Program: > Rules of Procedure for the investigation of professional conduct were adopted by the Federation Board in August, 1974; > The FAF Articles and By-Laws were amended to provide for cooperation between the FAF and the ICFA in the event that an allegation of professional misconduct was made about an FAF Fellow who is also a C.E A. Other refinements were made to the program as experience indicated necessary; > A Professional Conduct Committee (PCC) was constituted, as were eight regional committees. Ten charges were referred to the FAF President; they are under review preliminary to dismissal or referral to the PCC. An insurance policy was obtained to protect those serving the FAF in disciplinary proceedings; > The Investment Analysis Standards Board was formed. Under Chairman Richard W. Lam- bourne, C.F.A., it gave priority to study of the definition of "financial analyst," to restudy of the Code and Standards, and to specifications for the examination that will be required of all new regular members of societies beginning July 1, 1976; > The FAF directors in three separate board meetings -one of them a special mid-March meeting

-reaffirmed the intent that the program be one of self-regulation with steps taken to obtain recognition of third parties such as employers, related professional bodies, stock exchanges, govern- mental authorities, etc. To that end the officers of the Federation have sought opportunities to discuss the Self-Regulation Program with representatives of the Securities Industry Association; the Securities and Exchange Commission (both commissioners and staff); the Ontario and Quebec securities com- missions; state insurance commissioners, both in industry gatherings and as individuals; and a number

82 O FINANCIAL ANALYSTS JOURNAL I SEPTEMBER-OCTOBER 1975

This content downloaded from 185.2.32.106 on Sun, 15 Jun 2014 08:33:45 AMAll use subject to JSTOR Terms and Conditions

of legal groups. It would be fair to report that the reaction thus far has been supportive and en- couraging. We have been urged to keep the lines of communication open, which my fellow directors have every intention of doing. I would hope that you, too, as you have or can make opportunities, will talk about the Self-Regulation Program and our Code of Ethics and Standards of Professional Conduct with your employers, professional associates, and any others interested.

What do we cover in our meetings with these interested individuals? The themes are the familiar girders of the self-regulation structure: private and voluntary participation; uniform standards; low cost; and peer-group involvement in every aspect of standard formation, adoption, and enforcement.

Visible and controversial as the Self-Regulation Program has been, it was not the only major FAF activity of the year.

For instance:

The Financial Accounting Policy Committee, chaired by William C. Norby, C.EA., prepared and submitted eight papers to the Financial Accounting Standards Board and appeared at three hearings. The committee did two special studies at the request of the FASB. It prepared two re- sponses to the S.E.C. and through its chairman appeared at one hearing. An accounting panel has been formed to gather additional opinions and data for committee decisions.

-Ad hoc committees or task forces or staff groups also prepared, exposed to the FAF directors, and then submitted papers to the S.E.C. on corporate earnings projections, the investment adviser brochure, and social issue accounting.

-The Fall and Spring conferences, in Detroit and Chicago, respectively, each received high praise for the imagination, variety, and depth of their programming and content, although industry con- ditions kept overall attendance down. Industry seminars on Health Care, Philadelphia, and In- surance, Hartford, earned substantial attendance and encouraged the Program Committee to schedule other industry meetings on a regional basis in 1975-76.

The Financial Analysts Journal held its fiscal head high despite the advertising slump; the magazine, judged by reprint orders, was doing many content things right.

-The Admissions Committee brought one recommendation for the admission of a new society- The Seattle Society of Financial Analysts, Inc. - and counseled with two societies and their chapters, both of which are looking toward admission in 1975-76.

-Dues for retired members and for those who hold memberships in more than one society were decreased effective July 1, 1975.

Looking back or ahead, one sees much work done and much work to be done. I have met many of you. I hope that I may meet many more of you. I have appreciated learning of your concerns and having your support. I would covet for the Chairman who succeeds me, Bill Gray of Chicago, the same affection, support, and corrective comments you have given me in abundance.

You are wonderful people. I have been privileged to serve you a year as your Chairman.

1975-76 FAF Committee FAF Chairman William S. Gray named the following committee chairmen for 1975-76: Chairmen Named Admissions - Kenneth E. Gerhardt, C.EA., Los Angeles;

Articles and By-Laws - Thomas H. Hensen, C.EA., Saint Louis; Audit Review - R. David Radford, Toronto; Awards - Mary Petrie, C.F.A., Chicago; Corporate Information - Robert E. Reiser, Jr., C.EA., Atlanta; Education - William M. Craig, C.F.A., Cleveland; Financial Accounting Policy - William C. Norby, C.EA., Chicago; Government Relations - William S. Gray III, C.EA., Chicago; International Analysts Relations - Adolphe J. Warner, C.EA., New York; Investment Analysis Standards Board - Richard W. Lambourne, C.F.A., San Francisco; Policy and Planning - Walter S. McConnell, C.F.A., New York; Professional Conduct Committee - Morris W. Offit, C.EA., New York; Program - John A. Nielsen, C.EA., New York. Peter A. Spark, C.F.A., Toronto, was appointed chairman of the Canadian Council. Chairing the boards of summer seminars will be: Andrew N. Smith, C.F.A., Toronto, Canadian Investment Seminar; Herbert J. Royce, C.F.A., Twin Cities, Financial Analysts Seminar; Howard P. Colhoun, C.F.A., Baltimore, Investment Management Workshop. The directors of the Federation approved the appointments during their August 20 meet-

ing at Rockford College, Rockford, Ill.

This content downloaded from 185.2.32.106 on Sun, 15 Jun 2014 08:33:45 AMAll use subject to JSTOR Terms and Conditions

FAF Fall Conference Which way for humankind - toward global population and production equilibrium within

Will Look at a hundred years or world disaster fed by overpopulation, reckless exhaustion of natural

,"Limits to Growth" resources, environmental pollution, mass starvation, and eventual industrial collapse'? The FAF Fall Conference will bring together panels of experts to weigh the alternatives,

the choices each puts before current decision-makers, and the costs of decisions either way. Taking its theme from the title of a report of a study done by an MIT project team on

"The Limits of Growth," the October 5-8 Conference in Atlanta will include the project director, Dr. Dennis L. Meadows among panelists. Dr. Meadows wrote the report, which all conference registrants will receive before the first conference panel opens Monday morning, October 6 at 9:00 A.M.

Conference leaders also include George S. Bissell, C.F.A., Massachusetts Financial Ser- vices; Richard Cooper, Yale University; John Bunting, chairman, First Pennsylvania Bank; and C. Roderick O'Neil, C.F.A., executive vice president, Manufacturers Hanover Trust Company, New York.

In addition to a half-day discussion of the conference theme and its implications, par- ticipants will have such additional panels to choose among as fixed income management, index funds, ERISA, consumer spending, and pension fund investing.

General conference sessions will include discussions of domestic and international economic outlook, the relationship between industry and government, and the stock market outlook.

FAF Responds to SEC In a brief response to SEC proposals on disclosure of projections of corporate earnings, the

Projections Release FAF registered basic opposition to the "magnitude and complexity" of proposed filing requirements. The response was made by William S. Gray, C.F.A., FAF Chairman and chairman of the Ad Hoc Committee on Corporate Earnings Forecasts. Copies of the response are avilable free from the FAF office. Earlier FAF study (Disclosure of Corporate Forecasts to the Investor, 1973, $15) was cited as basic view of Federation.

FASB Names Four The Financial Accounting Standards Board has appointed a fifteen-member Screening

To Key Bodies Committee on Emerging Issues to assist in evaluating the magnitude and urgency of emerging problems. Serving on the committee will be David Norr, C.F.A., First Manhattan Co., a member of the FAF Financial Accounting Policy Committee. Mr. Norr is the author of the recently published second volume of Accounting Theory Illustrated, this one on 1974 annual reports. (Available First Manhattan Co., paper, $4.00.)

William C. Norby, C.F.A., Mr. Norr, and Frances Stone, C.F.A., will serve on the FASB's Advisors Council.

Walter P. Stern, C.F.A., former president of the FAF and current vice chairman of the Institute of Chartered Financial Analysts, has been elected a trustee of the Financial Ac- counting Foundation.

First Regional Banking The FAF's first regional banking symposium will be held in Charlotte, N.C., September 9-

Symposium To Be Held 10. In addition to focusing attention upon the regional economy, the symposium will probe

in Charlotte, N.C. regional concerns of such national problems as REIT's and construction loans. Keynote speaker will be Robert P. Black, president of the Federal Reserve Bank of Rich-

mond, who will address the dinner meeting September 9. Among other speakers will be: Thomas I. Storrs, chairman, and William H. Dougherty, Jr., president, NCNB Corp., Charlotte; Richard L. Kattel, chairman, Citizens & Southern National Bank, Atlanta; John G. Medlin, Jr., president, Wachovia Bank & Trust Co., Winston-Salem; Martin C. Miler, chairman and president, Hibernia Corp., New Orleans; Frank A. Plummer, chairman, First Alabama Bancshares, Inc.; and Charles E. Rice, president, Barnett Banks, Jacksonville.

Future Dates September 9-10, Southeast Banking Symposium, Charlotte, N.C. October 1, Deadline for late applications for C.F.A. exams for June, 1976. October 5-8, FAF Fall Conference, Atlanta, Ga. November 20, ICFA Seminar, Canada. May 15-19, 1976, FAF Spring Conference, New York. May 25-28, Ninth Congress of European Federation of Financial Analysts Association,

Brighton, England.

This content downloaded from 185.2.32.106 on Sun, 15 Jun 2014 08:33:45 AMAll use subject to JSTOR Terms and Conditions