Case Facts

As the only CFA charterholder employed at CrowdWisdom, Agarway is in charge of due diligence. His role is to identify suitable companies for the online platform to offer to potential investors. At his previous employer, FunderWise, Agarway developed a screening process that he trusts so much that he has personally invested in a few FunderWise listed companies using this approach.

Now at CrowdWisdom, Agarway uses a similar due diligence process to pick companies. One of the most promising candidates is an IT startup named Deko. Most of Deko's software users are pre-teens and teenagers. Deko's strategy is to market its shares to the young users through email communications, and in the email Deko states the offer is available to adults of 18+.

Select investors at CrowdWisdom (Investor Club) can have preferential access to additional market intelligence research.

Recently CrowdWisdom has grown so rapidly that Agarway's stack of applications for review has grown from 100 to 300 companies. The founders of CrowdWisdom are asking Agarway to modify the due diligence process and reduce time spent on each application. The target application acceptance rate is suggested to be increased significantly to 10%.

Standard I (A) - Knowledge of the Law

Members don't have to know the laws in every country, but they need to keep informed about any changes of laws. Legal counsel can provide assistance in this regard.

In some countries it may not be legal to collect information on minors without parental permission. Agarway needs to be aware of legal implications of adding Deko to the CrowdWisdom platform. Legal counsel should be consulted before listing Deko.

Stardard I (B) - Independence and Objectivity

Agarway is pressured by the company founders to speed up the screening process. This is likely to put his independence and objectivity at risk. Agarway should work with the company's senior leaders to create a documented process that has a reasonable basis and can be applied objectively.

Standard VI (A) - Disclosure of Conflicts

Members and candidates must make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duties to their clients, prospective clients, and employers.

The Investor Club members' special access need to be disclosed to all investors. Agarway's own investments also need to be disclosed to his supervisor, compliance offer and the CrowdWisdom platform users.