Ethical Dilemma Involving Personal Gain and Professional Responsibility

Mr. Smith is a senior portfolio manager at an investment firm. He has recently been approached by an external company offering a lucrative partnership that could result in significant personal monetary gain for him. However, this company has a controversial history regarding its business practices, which may pose a reputational risk to Mr. Smith’s firm and affect client trust. Mr. Smith is well aware of the firm’s Code of Ethics, which emphasizes integrity, professionalism, and putting clients’ interests ahead of personal gain.

As part of the CFA Institute’s ethical standards, professionals must navigate situations where personal interests might conflict with their professional obligations. Considering these factors, outline the ethical considerations Mr. Smith must grapple with while making his decision about the partnership. Discuss how he should balance his personal interests with his fiduciary duty and professional responsibilities to his clients and employer. Include specific references to the CFA Institute's Code of Ethics and Standards of Professional Conduct in your reasoning.