Chartered Investment Manager (CIM) Practice Exam · Question
A Canadian investment manager identifies an apparent conflict of interest where their personal holdings could be impacted by a client's portfolio trade. What is the manager's ethical obligation in this situation?
According to ethical standards and regulatory requirements (e.g., CIRO), an investment manager faced with a conflict of interest must disclose it to the client,
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Question: A Canadian investment manager identifies an apparent conflict of interest where their personal holdings could be impacted by a client's portfolio trade. What is the manager's ethical obligation in this situation?
Answer options: ✅ Disclose the conflict to the client and obtain their informed consent before proceeding.
- Prioritize the client's interests and execute the trade immediately.
- Execute the trade and then retroactively disclose the conflict.
- Refrain from trading for the client and refer them to another manager.
Correct answer: Disclose the conflict to the client and obtain their informed consent before proceeding.
Explanation: According to ethical standards and regulatory requirements (e.g., CIRO), an investment manager faced with a conflict of interest must disclose it to the client, ensure the client understands the conflict, and obtain informed consent before proceeding. Failing this, they must avoid the conflict.
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