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CFA Level I · CFA Level I Exam · Guidance for Standard IV: Duties to Employers

A portfolio manager's employer prohibits staff from serving on the boards of listed companies, even though such service would be lawful. The manager is invited to join the board of a listed supplier to a client company. Under Standard VI(A), the manager most likely:

The manager must comply with the employer's restriction. The guidance explains that even the appearance of a conflict can cause problems, so employers may restrict outside board membership and personal trading, and members and candidates must follow these restrictions regardless of disclosure or pay.

  1. Amust comply with the restriction, since employers may prohibit activities that merely give the appearance of a conflict.Correct
  2. Bmay accept if the board role is disclosed to clients.
  3. Cmay accept if the role is unpaid.

Explanation

The guidance states that the mere appearance of a conflict can create problems, so employers may prohibit outside board membership, and members and candidates must comply with these restrictions. Disclosure to clients or the role being unpaid does not override the employer's prohibition.

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