Prioritization of Client Interests in Personal Trading

Hard Cfa Institute Code And Standards Conflicts - Priority Of Transactions

James is a portfolio manager at an investment firm and has discovered a valuable investment opportunity that he believes could yield significant returns. Before making an investment on behalf of his clients, he personally purchases a substantial amount of the same security for his individual account. James is aware that by doing so, he risks prioritizing his own investment over that of his clients. His actions may lead to potential conflicts of interest.

According to the CFA Institute Code of Ethics and Standards of Professional Conduct, what is the most appropriate course of action for James concerning his personal investment?

James should disclose his personal investment to his clients, as transparency is sufficient.

James should refrain from purchasing the security for his personal account until he has fully disclosed this situation to his clients and received their approval.

James can proceed with his personal investment, as long as it does not affect the client’s investment decisions.

Hint

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