CFA Level I · CFA Level I Exam · Guidance for Standard VI: Conflicts of Interest
An investment manager holds shares in a company that she also recommends to her clients. According to Standard VI(A), the manager is most likely required to:
The manager must disclose her beneficial ownership of the shares to clients. Standard VI(A) requires disclosure of ownership in recommended securities. A ban on ownership is a simple method but is described as possibly overly burdensome and too restrictive, so it is not mandatory.
- Asell the shares before making any recommendation.
- Bdisclose her beneficial ownership of the shares to clients.Correct
- Cstop recommending any company whose shares she owns.
Explanation
The guidance says members must disclose any beneficial ownership interest in securities they recommend. Prohibiting ownership is one simple method but may be overly burdensome and too restrictive, so a forced sale or ban on recommending is not required.
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