Addressing Conflicts of Interest in Investment Analysis

Easy Professional Standards Application Conflicts Of Interest

As a financial analyst at a large investment firm, you are involved in evaluating potential investment opportunities for your clients. During your analysis, you receive a pitch from a start-up company founded by your brother. You are excited about the investment but aware of the potential conflict of interest this situation may involve.

According to the CFA Institute's Code of Ethics and Standards of Professional Conduct, which of the following actions should you take to address this conflict of interest?

Disclose your relationship with the start-up to your supervisor and recuse yourself from the investment decision process.

Proceed with the investment analysis without disclosing your relationship, as you are confident your analysis will be objective.

Suggest the investment to your clients, emphasizing the positive aspects without mentioning your relationship.

Hint

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