Conflict of Interest: Familial Relationships in Investment Analysis

Very Hard Professional Standards Application Conflicts Of Interest

Emily is a senior investment analyst at a large mutual fund company that has recently purchased a significant equity stake in a private technology firm. While analyzing this technology company, she discovers that her brother is one of the senior executives responsible for strategic decisions within that firm. The mutual fund is expected to make public statements about the investment, which could affect the stock price. Concerned about the potential for conflict, Emily seeks advice from her firm’s compliance officer.

The compliance officer outlines various options but focuses primarily on Emily’s need to disclose her relationship. Emily is uncertain about the appropriate actions she should take to satisfy her ethical obligations while ensuring her firm’s interests are not compromised. Which of the following should Emily primarily consider as she navigates this situation?

Emily should disclose her relationship with her brother to her compliance officer and consider recusing herself from any analysis or decisions related to the investment.

Emily does not need to disclose her relationship since she has no direct influence on the firm’s strategy and the investment decision was made at a higher level.

Emily can proceed with her analysis without any specific disclosures, as the investment is part of a broader portfolio strategy that does not concern her.

Hint

Submitted6.3K

Correct4.9K

% Correct78%