Ethical Decision-Making: Client Duties and Conflicts of Interest

As a portfolio manager at an investment firm, you have established a strong relationship with a client, Mr. Johnson, who trusts your judgement regarding his investment strategy. Recently, you have been approached by a colleague who works for a competing firm. This colleague has shared insights about a new investment opportunity that they believe could benefit Mr. Johnson's portfolio. Although the information seems promising, you are aware that your firm has not fully vetted this opportunity, and there are potential conflicts of interest if you were to act on this information.

Given your duty to act in the best interest of your client, outline the steps you would take in this scenario to ensure compliance with the CFA Institute's Code of Ethics and Standards of Professional Conduct. Discuss any potential ethical dilemmas you may face, the obligations you have to provide suitable investment opportunities to your client, and how you would communicate the findings to Mr. Johnson.