Disclosure of Personal Relationships in Investment Analysis

Hard Professional Standards Application Conflicts Of Interest

Alex is a senior analyst at an investment advisory firm. He has been tasked with evaluating a private equity investment opportunity in a renewable energy startup.

During the analysis, he discovers that the startup's CEO is a close friend from college. Despite his personal connection, Alex decides to continue evaluating the opportunity. However, he does not disclose this friendship to his supervisor or the investment committee, believing that his professional judgment remains unbiased.

What should Alex have done to adhere to the CFA Institute's Code of Ethics and Standards of Professional Conduct regarding conflicts of interest?

Alex should disclose his personal relationship with the CEO to his supervisor and the investment committee.

Alex should recuse himself from the analysis entirely to avoid any potential conflict.

Alex can continue his analysis without disclosing the relationship since he believes his judgment is not affected.

Hint

Submitted6.7K

Correct5.2K

% Correct79%