Code of Ethics and Standards of Professional Conduct: practice question

Ana Delgado, a portfolio manager at Novestra Capital, learns she could earn a substantial referral fee by steering her clients into a fund managed by her brother-in-law. Which principle from the CFA Institute Code of Ethics most directly governs how she should handle this situation?

1. Deal fairly with all clients when allocating attractive investment opportunities
2. Place the integrity of the profession and the interests of clients above her own personal interests
3. Maintain and improve her professional competence and strive to enhance the competence of other investment professionals

Show answer and explanation

Correct answer: B

Explanation: B is correct: the Code of Ethics requires members to put the integrity of the profession and clients' interests ahead of personal gain, which rules out steering clients into a fund for a private referral benefit. A describes fair dealing among clients, which concerns allocation of opportunities rather than a conflict between Delgado's own pocket and her clients. C concerns professional development and does not address the personal-benefit conflict in this situation.