Michael is a portfolio manager at investments firm XYZ Capital. Recently, he has been approached by an old college friend, David, who has found himself in financial difficulty after a series of unfortunate events. David requests a personal loan of $100,000, indicating that he would like to invest this money to turn his situation around, promising Michael a generous return. Michael is aware that lending money to a friend may compromise his duties as a fiduciary to his clients. Furthermore, he knows that if he proceeds with this arrangement, he may have to disclose this transaction to his clients according to his firm's compliance policy.
As Michael contemplates his decision, he recalls the CFA Institute's Code of Ethics and Standards of Professional Conduct, particularly focusing on his duties to clients and the importance of prioritizing their interests. Which of the following actions should Michael take to ethically address David’s request while maintaining his fiduciary responsibilities?