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CFA Level II Exam · Guidance for Standard VI: Conflicts of Interest

Standard VI(A): Disclosure of Conflicts Explained

Updated 7 October 2026 · Fact-checked

Standard VI(A) requires members and candidates to make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with their duties to clients, prospects and employers. Disclosure must be prominent, plain and specific. Where a conflict cannot be managed by disclosure, you avoid it.

Understand Standard VI(A): Disclosure of Conflicts

A conflict of interest exists when your own interests, or those of someone you are connected to, could pull against what your client or employer is entitled to expect from you. The conflict is not always a breach. The breach comes from hiding it or acting as if it did not exist.

Standard VI(A) works on two ideas: avoid and disclose. Where you can, avoid the conflict. Where you cannot, tell the people affected so they can judge your advice for themselves. The Standard says 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. They must ensure that disclosures are prominent, are delivered in plain language, and communicate the relevant information effectively.

The disclosure must reach the right audience. Conflicts that affect clients and prospects are disclosed to them. Conflicts that affect your employer, such as your own shareholdings or outside board seats, are disclosed to the employer. A conflict affecting both goes to both.

Common sources of conflict in the Handbook are: ownership of the stock you are recommending, a firm's investment banking relationship with a company it covers, a broker-dealer holding inventory in a recommended security, compensation or bonus tied to a particular product, board service at a covered company, and referral arrangements. Disclosure of a referral fee falls under Standard VI(C), but the same logic applies.

The Handbook also stresses that the best practice is to err on the side of disclosure. If you wonder whether something is a conflict, it usually should be disclosed. Disclosure also has to be timely and specific. A vague statement buried in fine print does not meet the Standard. Disclosure does not cure everything. Some conflicts are so serious that the right action is to step away from the matter or have the work done by someone else.

Key formulas to remember

Core duty
Avoid conflicts where possible; otherwise make full and fair disclosure
Applies to matters that could reasonably be expected to impair independence and objectivity or interfere with duties to clients, prospects and employer.
Quality of disclosure
Prominent + plain language + effective communication
Fine print, jargon or vague wording does not satisfy the Standard.
Who must be told
Clients and prospects for conflicts affecting advice; employer for conflicts affecting duties to the employer
Some conflicts require both.
Test for a reportable conflict
Could it reasonably be expected to impair independence, objectivity or duties?
The test is reasonable expectation, not proof of actual harm.
Default position
When in doubt, disclose
The Handbook encourages erring on the side of disclosure.

How to solve Standard VI(A): Disclosure of Conflicts questions

Use this sequence on any item set that touches Standard VI(A). Read the vignette once for facts, then test each one against the Standard.

  1. 1Identify who has the interest: the member, a relative, the firm, or a client. Note exactly what the interest is.
  2. 2Ask whether it could reasonably be expected to impair independence and objectivity, or interfere with duties to clients, prospects or employer. If yes, a conflict exists.
  3. 3Identify who is affected: clients, prospects, the employer, or more than one.
  4. 4Check what the member did. Was the conflict avoided, disclosed, or hidden?
  5. 5If disclosed, test the quality: is it timely, prominent, in plain language and specific to the actual interest?
  6. 6Decide whether disclosure is enough or the member should avoid the situation, for example by stepping back from the recommendation.
  7. 7Name the Standard (VI(A)) and note any linked Standard such as I(B), IV(A), IV(B) or VI(C).
  8. 8Pick the option that discloses to the right party, in the right way, without breaching confidentiality or another duty.

Quickest way: Interest, audience, quality

When to use it: When you have about two minutes per question and several answer choices that all sound ethical.

  1. Underline the interest in the vignette (ownership, fee, board seat, relationship).
  2. Ask: does a client or the employer not know about it? If they do not, disclosure is needed.
  3. Eliminate options that hide the conflict, bury it in fine print, or tell only the wrong party.
  4. Choose the option that discloses fully, plainly and promptly, or avoids the conflict if disclosure is not enough.

Common mistakes in Standard VI(A): Disclosure of Conflicts

  • Thinking a conflict of interest is itself a violation.

    The word conflict sounds like wrongdoing.

    Fix: A conflict can be allowed if properly disclosed or managed. The violation is failing to avoid or disclose it.

  • Treating any disclosure as sufficient.

    Students stop at whether something was said.

    Fix: Check that it is prominent, in plain language and effectively communicated. Tiny print or jargon fails the Standard.

  • Disclosing to only one party.

    Students forget that clients and employers can each be affected.

    Fix: Identify whose duties are affected and make sure each of those parties is told.

  • Waiting for proof that independence was actually impaired.

    Students look for actual harm.

    Fix: The test is whether impairment could reasonably be expected. Disclose when it could.

  • Confusing VI(A) with VI(B) or VI(C).

    All three sit under Conflicts of Interest.

    Fix: VI(A) is general disclosure of conflicts, VI(B) is priority of transactions, and VI(C) is disclosure of referral fees.

Worked examples

Example 1

Item set. Mara Lindqvist, CFA, is a research analyst at Northgate Securities. She is about to publish a Buy recommendation on Altura Foods. Mara's spouse holds a sizeable position in Altura shares. Northgate's investment banking arm recently led a bond issue for Altura. Mara's report mentions neither fact. Q1: Does Mara have conflicts to address under Standard VI(A)? Q2: What should she do?

Show the solution
  1. Identify the interests: her spouse owns Altura shares, and her firm has an investment banking relationship with Altura.
  2. Test each: both could reasonably be expected to impair her independence and objectivity, since a Buy rating may benefit family wealth and the firm's banking client.
  3. Identify the audience: readers of the report (clients and prospects) must be told, and her employer should know about the spouse's holding.
  4. Check conduct: she disclosed nothing, so the Standard is not met.
  5. Choose the remedy: disclose both matters prominently and plainly in the report, tell her employer about the holding, and follow firm policy, which may restrict her from covering the stock.

Answer: Q1: Yes. Both the spouse's holding and the banking relationship are conflicts. Q2: She should disclose both in the report and to her employer, and follow firm policy, including stepping back if required. Publishing without disclosure violates Standard VI(A).

Example 2

Item set. Daniel Okafor, CFA, is a portfolio manager at Harbor Wealth. His clients receive an annual disclosure document. Harbor has just agreed to receive higher fees from an in-house fund. Daniel will recommend that fund to clients. The firm adds a line in 6-point type on page 14 of a long document saying it 'may have interests in products offered'. Q1: Is this adequate under Standard VI(A)? Q2: What would be adequate?

Show the solution
  1. Identify the interest: the firm earns higher fees on the in-house fund Daniel recommends, which could affect his objectivity.
  2. Identify the audience: clients who receive the recommendation.
  3. Test the quality of the disclosure: it is in tiny type, deep in a long document, and uses generic wording that does not state the actual arrangement.
  4. Compare to the Standard: it must be prominent, in plain language, and effective.
  5. Decide the fix: state the higher fee arrangement specifically, in a prominent place, before or when the recommendation is made.

Answer: Q1: No. The disclosure is neither prominent nor specific, so it does not meet Standard VI(A). Q2: A clear, plainly worded statement given prominently to clients, explaining that Harbor earns higher fees from the in-house fund he recommends.

Exam tips

  • Look for hidden interests in vignettes: spouse holdings, board seats, banking ties, bonus structures and in-house products.
  • Judge the quality of disclosure, not just its existence. Words like prominent, plain and specific signal the correct answer.
  • If one option avoids the conflict and another discloses it, check whether disclosure is enough given the facts. Serious conflicts may call for stepping aside.
  • Be clear about the audience. Employer-related conflicts go to the employer, advice-related ones to clients and prospects.
  • When the choice is between disclosing and staying silent, the Handbook leans toward disclosure.

Standard VI(A): Disclosure of Conflicts in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Standard VI(A): Disclosure of Conflicts: frequently asked questions

What does Standard VI(A) require?

It requires you to make full and fair disclosure of all matters that could reasonably be expected to impair your independence and objectivity or interfere with duties to clients, prospects and your employer. Disclosures must be prominent, in plain language and effective. Where possible, you should avoid the conflict.

Is disclosure always enough?

No. Disclosure is the minimum for conflicts you cannot avoid. If a conflict is serious enough that it would still compromise your independence or duties, the right step may be to avoid it or step away from the matter.

Who should I disclose a conflict to?

Disclose to whoever is affected. Conflicts that bear on advice go to clients and prospects. Conflicts that affect duties to your firm, such as your own holdings or outside roles, go to your employer. Some need both.

How is VI(A) different from VI(B) and VI(C)?

VI(A) is the general rule on disclosing conflicts. VI(B) deals with priority of transactions, so client and employer trades come before personal ones. VI(C) deals with disclosing referral fees to clients and prospects.