Conflict of Interest Scenario for CFA Portfolio Manager

Easy Professional Standards Application Conflicts Of Interest

John is a Chartered Financial Analyst (CFA) and works as a portfolio manager for a large investment firm. He has been approached by a family member who is interested in investing in a new startup that John's firm is considering for its investment portfolio. John knows that if he recommends this startup, it could create a conflict of interest since he would be benefitting personally from the investment.

Under the CFA Institute Standards of Professional Conduct, what should John do to best address this potential conflict of interest?

Inform his employer of the situation and recuse himself from any decisions related to the investment.

Proceed with recommending the investment to both his family member and the firm without disclosing his relationship.

Suggest his family member invests only after the firm has made its decision on the startup.

Hint

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