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Basic Question 5 of 9
Kite has been hired by Watson Industries, Inc., to manage its pension fund. Kite's fiduciary duty is to ______.
B. the management of Watson
C. the participants and beneficiaries of Watson's pension plan
A. the shareholders of Watson
B. the management of Watson
C. the participants and beneficiaries of Watson's pension plan
User Contributed Comments 10
| User | Comment |
|---|---|
| aspazia | why shareholders are not equivalent to beneficiaries??? |
| Chitu | shareholder's are not the participants in Pension fund. so 'C' is ok. |
| quynhnk79 | Who are participants in this case? Pls explain?How is it different to beneficiaries and shareholders? |
| ngeorge | Participants and beneficiaries are due a benefit under the pension plan (i.e. employees of the company and their beneficiaries). Shareholders are not due a benefit under the plan unless they also happen to be employees/participants. The pension fund is a trust maintained solely for the benefit of participants in the pension plan, not for the company or its shareholders. |
| TammTamm | All of the answers for this question could be correct but if we apply the standard to it, we know that the beneficiaries of the pension fund are those who duty is owed. |
| copus | good comment ngeorge - i think you nailed it! |
| cong | fiduciary duty is owed to the clients. |
| Rachelle3 | Kite is there to manage pension funds so C is the obvious choice it mentions pension plan read it carefully!! |
| Inaganti6 | thanks ngeorge |
| sshetty2 | the shareholders of Watson are not NECESSARILY the participants of the pension fund. In this case, Kite is hired to manage the pension fund and thus his fiduciary responsibility is to the participants/beneficiaries of the fund specifically. |
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Learning Outcome Statements
demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations involving issues of professional integrity
recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct
identify conduct that conforms to the Code and Standards and conduct that violates the Code and Standards
CFA® 2025 Level I Curriculum, Volume 6, Module 3.