Evaluating Conflict of Interest in Investment Decisions

Very Hard Professional Standards Application Ethical Decision-making

As a senior portfolio manager at a prominent investment management firm, you are presented with an investment proposal from a well-connected client.

The proposal outlines a new venture that the client claims will maximize returns and has already garnered significant interest from other investors. However, after conducting initial due diligence, you discover that the venture is linked to a personal friend who is a major stakeholder. While this friend insists that the venture conforms to all regulatory standards, you find some inconsistencies in the proposal.

Considering your fiduciary duty to act in the best interests of your clients and uphold ethical standards, how should you respond to this situation?

Proceed with recommending the investment as it is a lucrative opportunity without any legal constraints.

Disclose the potential conflict of interest to your firm's compliance department before making a decision.

Decline to pursue the investment and terminate the relationship with the client due to the personal connection.

Hint

Submitted7.3K

Correct5.7K

% Correct78%