After working as an equity research analyst for five years at Staple Asset Advisers, Davika Ravinder, CFA, receives a promotion to a junior asset manager position. She is given 20 relatively small portfolios, all involving middle-income clients who are saving for their children’s university educations and their own retirements. With her new position, Ravinder is given a higher base salary. Previously, her bonus was based on annual performance. She is now eligible for a percentage of the quarterly performance fee earned by the firm for returns higher than the client-negotiated performance hurdles. For competitive reasons, Staple does not allow any employee to disclose their compensation packages, including how bonuses are derived.
Once she has reviewed the investment objectives and constraints of each of her new clients, Ravinder arranges introduction meetings with each client. During a one-hour meeting with a self-employed client, 60-year-old James Canon, Ravinder discovers that he is newly divorced and has been ordered by the court to make a large one-time settlement to his ex-wife. In addition, his son and only child has dropped out of university and wants the money his father allocated for the son’s university education as seed capital to start his own business. The funds needed to make both of these payments are currently in the investment portfolio Ravinder manages for Canon. This portfolio is also to be used for Canon’s retirement at age 65. Based on what she learned during her meeting with Canon, Ravinder suggests he take a more aggressive investment strategy to compensate for the anticipated large withdrawals from his investment portfolio.
Ravinder receives permission from her supervisor to draft marketing materials to send out to potential clients with her name and contact information. She asks her assistant, Jon Obi, to edit the marketing content and design a simple brochure, ensuring that it complies with all the local regulations and company policies regarding marketing material. Obi does as requested and upon completion takes the initiative to send the brochure to potential clients. A week after the marketing brochure was sent to potential clients, Ravinder notices one of the clauses in the brochure is in violation of company policies.
While revising the marketing brochure, Ravinder determines it might be worthwhile to add some performance statistics to prove that her firm’s investment performance is attractive. She works with the portfolio administration team to create five-year weighted composites using similar type portfolios and removing client accounts when terminated. The portfolio administration team works with the compliance officer to ensure they include all the necessary disclosures but agree that they do not need to comply with Global Investment Performance Standards (GIPS). Included in the brochure is a disclosure the company has adopted the CFA Institute Standards of Professional Conduct.
A colleague in the research department, Koffe Mensah, CFA, approaches Ravinder seeking advice about a research report he is writing on a listed company. The majority of Staple’s clients hold this company’s shares in their portfolios. Mensah explains that his supervisor is pressuring him to make a buy recommendation to substantiate some positive rumors that the lead dealer heard about the company. Mensah states that his thorough research leads him to believe the company is overvalued. Ravinder reminds Mensah that if the share price moves up, Mensah will likely receive a higher bonus.
Shortly after becoming an asset manager, Ravinder is approached by one of the directors of Naivasha Cement, a company she used to cover as an equity analyst. The Naivasha director asks her if she would be interested in joining the board of directors. He adds, “The Naivasha Cement directors always appreciated your understanding of the industry and of our company in particular, so we think you would add value to the company.” After getting approval from her employer, Ravinder accepts the invitation to become a director.
After accepting Naivasha’s invitation, which of the following actions is the most appropriate for Ravinder to implement to avoid violating CFA Institute Standards of Professional Conduct? She should:
A.
only share Naivasha’s nonmaterial information.
B.
exclude purchases of Naivasha shares for client portfolios.
C.
refuse to attend Staple strategy meetings related to Naivasha.
B选项为什么错
