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Basic Question 3 of 4
True or False? If conflicts of interest exist, it is inherently unethical for individual managers, advisors, or mutual fund employees to make money from personal investments.
User Contributed Comments 6
| User | Comment |
|---|---|
| fding | i guess it is because "personal investments" is a too general term |
| Khadria | Tricky one but FALSE is correct. Don't presume that the conflict of interest is caused by the member! An example - suppose a member has bought some stocks and after some years that company became his client. |
| dblueroom | I think the key is that not all conflict of interests harms the client, therefore as long as it is properly disclosed. It is not unethical. |
| NikolaZ | Although the false makes sense, the explanation does not to me. For (2) 'the investment professional does not benefit personally...', what if the member has a stake in a stock he wants to trade for his client, and this is disclosed, and trading the stock benefits his client, but in return also ends up benefiting. This action is Pareto efficient and benefits both parties. In this case, the investment professional benefits but does so as a consequence of acting in his clients' interest, nothing wrong with that! |
| johntan1979 | Nothing wrong with the explanation (2). You may benefit professionally, as explained by you beautifully, just not PERSONALLY from your clients' trades. |
| Teeto | if your resolve the conflict in favor of the clients but still make money after that it should be OK. |
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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.