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CFA Level I · CFA Level I Exam · Code of Ethics and Standards of Professional Conduct

A portfolio manager's firm is located in a country with no law requiring disclosure of referral fees. The manager receives a fee from a broker for recommending the broker's products to clients. Under the Code and Standards, the manager most likely must:

The manager must disclose the referral fee. Where the law is silent or less demanding, members and candidates follow the more strict of applicable law or the Code and Standards, and the Code and Standards require disclosure of referral fees even if local law does not.

  1. Afollow local law and stay silent, since no law applies
  2. Bdisclose the referral fee because the Code and Standards impose a stricter obligationCorrect
  3. Cdisclose only if clients ask about compensation

Explanation

When applicable law and the Code and Standards require different conduct, members must follow the more strict. The Handbook gives referral fees as an example: the law may not require disclosure, but the Code and Standards do, so the fee must be disclosed.

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