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.
Q. 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:
- only share Naivasha’s nonmaterial information.
- exclude purchases of Naivasha shares for client portfolios.
- refuse to attend Staple strategy meetings related to Naivasha.
Solution
C is correct. Standard VI(A)–Disclosure of Conflicts requires a member or candidate who becomes a director of a publicly listed company to be isolated from those making investment decisions concerning the publicly listed company at which the employee is a director. One such way of doing this would be to not participate in investment strategy meetings when Naivasha is being discussed. But Ravinder would violate Standard I(D)–Misconduct if she shared nonmaterial information if the directors of Naivasha considered it to be confidential. She would also violate Standard III(A)–Loyalty, Prudence, and Care if she excluded Naivasha shares from her clients’ portfolios because this approach may negatively affect their investment performance.
A is incorrect because Ravinder would violate Standard I(D)–Misconduct if she shared nonmaterial information if the directors of Naivasha considered it to be confidential.
B is incorrect because Ravinder would also violate Standard III(A)–Loyalty, Prudence, and Care if she excluded Naivasha shares from her clients’ portfolios because this may negatively impact their investment performance
这道题不是很理解，麻烦老师解释下
