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

A portfolio manager must sell a personal holding to pay a tax bill. The sale runs counter to her current buy recommendation on the same stock for clients. Under Standard VI(B), her sale is most likely:

The sale is most likely permitted. The guidance accepts personal transactions that run counter to client advice when personal financial needs require it, provided clients are not disadvantaged, the member gains nothing from client trades, and regulatory requirements are met.

  1. Apermitted, if clients are not disadvantaged, she does not benefit from client trades, and rules are followedCorrect
  2. Ba violation, because personal trades must always match client recommendations
  3. Ca violation, because she must hold the stock until clients finish buying

Explanation

The guidance says members may be justified in acting counter to their advice for personal financial reasons. Nothing is inherently unethical if clients are not disadvantaged, the member does not benefit personally from client trades, and regulations are met. The other options impose requirements the guidance does not state.

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