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Level III Core · Guidance for Standard IV: Duties to Employers

Disclosure of Conflicts to Employers (Standard VI(A))

Updated 9 October 2026

Standard VI(A) requires members 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 their employer, clients and prospective clients. Disclosures must be prominent, in plain language and specific enough to be understood. Where possible, avoid the conflict.

Understand Disclosure of Conflicts to Employers (Standard VI(A))

A conflict of interest arises when your own interests, or those of someone close to you, could pull against the interests of your employer or clients. The conflict itself may not be wrong. Hiding it is what breaks the Standard.

Standard VI(A) is titled Avoid or Disclose Conflicts. It 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. Members must ensure that disclosures are prominent, are delivered in plain language and communicate the relevant information effectively.

The test is whether a reasonable person could expect the matter to affect your judgment or your work. Typical matters are stock ownership in a company you cover, a seat on the board of a company you analyse or invest in, and compensation arrangements that reward you for outcomes other than your employer's interest. Other examples are family or personal relationships and a close tie to an issuer.

One part of the Standard is disclosure to the employer. It matters because the employer can then decide what to do: accept the situation, restrict your role, reassign you or ask you to give up the interest. Disclosure to clients and prospective clients matters too, because they need it to judge your advice. Disclosure should be specific, made to the right person, and made early. Written disclosure is best practice and the safest way to document it, but the Standard does not require it. Where practical, the better course is to avoid the conflict altogether. If you cannot avoid it, disclose it.

The Standard sits alongside Standard I(B) on independence and objectivity and Standard IV(B) on additional compensation. A single case can engage more than one Standard, so name each one that applies.

Key rules to remember

Core rule of Standard VI(A)
Avoid conflicts where possible; otherwise make full and fair disclosure
Disclosure is needed for matters that could reasonably be expected to impair independence and objectivity or interfere with duties to clients, prospective clients and the employer.
Quality of disclosure
Prominent + plain language + effectively communicated
Burying the item in fine print, or using vague wording, does not meet the Standard.
Typical matters to disclose to the employer
Stock ownership, board or director positions, compensation or bonus arrangements, family or personal relationships
The list is illustrative. The test is whether the matter could reasonably be expected to affect independence, objectivity or duties.
Who is owed disclosure
Employer + clients + prospective clients
Employer disclosure lets the firm manage the conflict. Client disclosure lets clients judge the advice.
Form of disclosure
Specific, timely, to the right person; preferably written
Written disclosure is best practice, not a requirement of the Standard. It creates a record and removes doubt about what was said and when.

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

Use the same sequence for any vignette or essay on conflicts. It keeps your answer short and ties it to the Standard.

  1. 1Identify the interest: shares, board seat, bonus structure, family tie or other personal benefit.
  2. 2Ask whether it could reasonably be expected to impair independence and objectivity or interfere with duties to the employer, clients or prospective clients.
  3. 3Check whether the conflict can be avoided, for example by selling the shares, resigning the seat or declining the arrangement.
  4. 4If it cannot be avoided, decide who must be told: the employer first, and clients and prospective clients where their decisions are affected.
  5. 5State how the disclosure should be made: prominent, in plain language and specific, preferably in writing.
  6. 6Check for linked Standards such as I(B), IV(B) and III(A), and name them if they apply.
  7. 7Match your conclusion to the command word: state the violation, recommend the action or say what the member should do.

Quickest way: Three-question conflict check

When to use it: Use when a multiple-choice item gives a short scenario and asks whether the member violated the Standard or what the member should do.

  1. Is there a personal or compensation interest? If no, there is likely no VI(A) issue.
  2. Could it reasonably affect judgment or duties? If yes, a conflict exists.
  3. Was it avoided or fully disclosed in the right way and to the right parties? If not, it is a violation, and the fix is to disclose, preferably in writing.

Common mistakes in Disclosure of Conflicts to Employers (Standard VI(A))

  • Thinking a conflict is itself a violation.

    Students link the word conflict with wrongdoing.

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

  • Disclosing only to clients and forgetting the employer.

    Client protection feels like the main goal of the Code.

    Fix: Standard VI(A) covers the employer, clients and prospective clients. Always check that the employer has been told.

  • Accepting a vague or buried disclosure as enough.

    Students see that some disclosure was made and stop checking.

    Fix: Check that it is prominent, in plain language and specific enough to be understood.

  • Assuming only share ownership counts.

    Textbook examples often use stock holdings.

    Fix: Board seats, compensation arrangements and personal relationships can also create conflicts.

  • Choosing disclosure when avoidance is practical.

    Students treat disclosure as always sufficient.

    Fix: The Standard prefers avoiding conflicts where possible. Recommend giving up the interest when that is reasonable, and disclose when it is not.

  • Ignoring other Standards in the same case.

    Students focus on the Standard named in the chapter.

    Fix: Check I(B) and IV(B). Cite III(A), Loyalty, Prudence and Care, only where the facts show the member actually favouring his own interest over a client's. Consider III(B), Fair Dealing, if one client is favoured over another. A compensation arrangement alone does not engage III(A).

Worked examples

Example 1

An analyst covers a listed manufacturing company. She owns shares in it and has been asked to join its board as a non-executive director. She has told no one at her firm. Identify the Standard that applies and state what she should do.

Show the solution
  1. Identify the interests: share ownership in a covered company and a possible board seat at that company.
  2. Test them: both could reasonably be expected to impair her independence and objectivity when she writes research on the company.
  3. Check avoidance: she can decline the board seat and sell the shares, which would remove the conflict.
  4. If she keeps either interest, she should disclose it to her employer, preferably in writing, and the firm must decide whether she can keep covering the company. Clients receiving her research must also be told.
  5. Name the linked Standard: I(B) on independence and objectivity. Standard IV(A) would come in only if the facts showed the board role competes with her employer, which they do not say.

Answer: Standard VI(A) applies, with Standard I(B) linked. She should avoid the conflict where possible. If she keeps the shares or accepts the seat, she should make full and fair disclosure to her employer, preferably in writing, and to clients where her research reaches them.

Example 2

A portfolio manager's bonus rises sharply if one of the funds he manages beats its benchmark. He also advises a private client whose account is not part of that fund. He tells his employer only that he has a performance-linked bonus. Is this enough under Standard VI(A)?

Show the solution
  1. Identify the interest: a compensation arrangement that rewards fund outperformance.
  2. Test it: it could reasonably tempt him to favour the fund over the private client, which could interfere with his duties to that client.
  3. Assess what he disclosed: a general statement that the bonus is performance-linked, with no detail on how it works or which fund is involved.
  4. Apply the quality test: disclosure must be specific, prominent and in plain language so the recipient can understand the conflict.
  5. Decide who else is owed disclosure: the private client should learn of the arrangement so he can judge the advice.

Answer: No. The disclosure is too vague. He should make full and fair disclosure to his employer, giving a specific account of the bonus arrangement and the fund involved, preferably in writing, and disclose it to affected clients, in line with Standard VI(A).

Exam tips

  • In an essay, name the Standard first, then the interest, then the required action. This earns points in few words.
  • When a scenario shows a disclosure, check its quality: prominent, plain and specific. Written disclosure is best practice, but the Standard does not require it.
  • Prefer avoidance when the vignette makes it practical, such as selling a small holding.
  • Look for hidden second Standards, especially I(B) and IV(B), and mention them when the facts support them. Cite III(A), Loyalty, Prudence and Care, only when the member actually favours his own interest over a client's, and consider III(B) if one client is favoured over another. A bonus alone does not engage III(A).
  • There is no penalty for wrong answers, so answer every item. Eliminate options that say a conflict is always a violation or that silence is acceptable.

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

What does Standard VI(A) require?

It requires members to make full and fair disclosure of all matters that could reasonably be expected to impair independence and objectivity or interfere with duties to clients, prospective clients and the employer. Disclosure must be prominent, in plain language and effective. Avoiding the conflict is preferred where possible.

Must I always disclose to my employer in writing?

The Standard requires clear, effective disclosure. Written disclosure is the safest way to show what was said and when, so you should choose it in exam answers unless the question points elsewhere.

Is owning shares in a company I cover a violation?

Not by itself. It becomes a violation if you fail to avoid or properly disclose the interest. If it could reasonably affect your independence, tell your employer, and consider selling the shares.

How is VI(A) different from IV(B)?

Standard IV(B) requires members to obtain written consent from their employer before accepting compensation or benefits from clients or third parties for services rendered that compete with, or might create a conflict with, the employer's interests. Standard VI(A) covers the wider set of conflicts, such as ownership and board seats, that affect independence or duties.