Duty of Loyalty: Conflict of Interest Example

Medium Cfa Institute Code And Standards Employer Duties - Loyalty

James is a portfolio manager at a well-respected investment firm. His firm is undergoing a restructuring, and several employees, including James, have been informed that their positions might be eliminated. During this transition, James receives an offer from a rival firm, which includes a lucrative sign-on bonus that would significantly increase his income. While reviewing his responsibilities, James realizes that several clients have been inquiring about investment advice related to the rival firm’s products.

As he considers his options, James must determine the best course of action in accordance with the CFA Institute's standards. Which of the following actions would be considered a violation of his duty of loyalty to his current employer?

Discussing opportunities available at the rival firm with colleagues before making a decision.

Encouraging clients to switch to the rival firm while still employed at his current firm.

Continuing to provide unbiased investment advice amid the restructuring.

Hint

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