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CFA Level I · CFA Level I Exam · Guidance for Standard III: Duties to Clients

Weng emails a new recommendation to all his clients. He then phones his three largest institutional clients to discuss it in detail, and they pay him for the personal outreach. Weng has most likely:

Weng most likely complied with Standard III(B). He widely disseminated the recommendation to all clients before discussing it with a select few, and the larger clients received extra personal service because they pay higher fees. Calling them first would have been a violation.

  1. Aviolated Standard III(B) because the three clients received extra service
  2. Bcomplied with Standard III(B) because he disseminated the recommendation widely before the callsCorrect
  3. Cviolated Standard III(B) because he accepted compensation from the clients for the calls

Explanation

Differentiated service is permitted when it does not disadvantage other clients. Weng distributed the recommendation to all clients before discussing it with a select few. Had the calls come first, he would have violated the Standard.

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