Conflict of Interest and Disclosure

Easy Ethical Decision-making Professionalism

Michael is a senior investment analyst at Global Capital Advisors, where he manages a portfolio of client assets. Recently, he received an investment recommendation from a colleague, Sarah, who suggested investing heavily in a particular tech company. Sarah is dating the CEO of that company, which Michael was unaware of until he overheard them discussing their relationship during a meeting.

Faced with this potential conflict of interest, Michael reflects on his responsibilities to his clients. He knows that the CFA Institute Code of Ethics emphasizes the importance of avoiding even the appearance of a conflict of interest. He is now considering how to approach this situation before presenting the investment recommendation to clients.

What should be Michael's best course of action in this scenario?

Michael should disclose the relationship between Sarah and the CEO to his clients before discussing the investment.

Michael can go ahead with the investment recommendation since Sarah's relationship does not directly involve him.

Michael should ignore the relationship as it doesn't impact his analysis of the company.

Hint

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