Skip to content

FRM Part I · FRM Exam Part I · GARP Code of Conduct

A risk consultant, while performing a model validation for Client A, discovers non-public information about Client A's planned restructuring. A friend at a hedge fund asks for general views on the sector. Which response is consistent with the GARP Code of Conduct?

The consultant should keep the client's information confidential and discuss only public views. The GARP Code bars disclosing confidential information gained professionally, except where authorized or legally required, and a third party's promise of secrecy or the timing before announcement does not change that.

  1. AShare the restructuring detail only if the friend promises to keep it private
  2. BShare the information after the restructuring has been decided but before it is announced
  3. CShare only the information that is not marked confidential in the engagement letter
  4. DKeep the client information confidential and discuss only publicly available viewsCorrect

Explanation

Members must not disclose confidential information obtained in the course of professional activities except where legally required or authorized, and must not use it for personal or others' advantage. A promise of secrecy from the friend does not make disclosure permissible. Only public information may be discussed.

Did you get it right without looking?

One question tells you little. A timed set on GARP Code of Conduct shows your real accuracy, how long you take and where you lose marks.

Practise GARP Code of ConductFree diagnostic mock

More GARP Code of Conduct questions