Bob Herman, CFA, has a large extended family and manages the portfolios of several family members. Bob does not charge the family members a management fee, but receives a small percentage of each portfolio's profits. Bob accepts a position as portfolio manager for A-Plus Investments to manage high-net-worth accounts. Because the family portfolios are not customary or normal client relationships, Bob does not inform his new employer of his side activity. Bob is least likely to have violated which CFA Institute Standard of Professional Conduct?

A. Loyalty
B. Preservation of Confidentiality
C. Additional Compensation Agreements

Correct Answer: B

There is no evidence that Bob violated Standard III (E) Preservation of Confidentiality. Members who plan to engage in independent practice for compensation should not render services until receiving written consent from their employer. To do so without prior consent from the employer violates Standard IV(A) Loyalty and Standard IV (B) Additional Compensation Agreements.