CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Jeff Riches, CFA, is an analyst at Save-on-Investment (SOI). Riches receives compensation for referrals to the bank's brokerage and personal financial-planning divisions. His recent referrals are long-time clients from his previous employer; Riches does not mention SOI's referral arrangement. Does Riches violate any CFA Institute Standards?
A. Yes, with respect to Misrepresentation.
B. No
C. Yes, with respect to Conflicts of Interest.
Explanation: Compensation or other benefits received for the recommendation of products or services represents a conflict of interest. According to the Standards, Riches must disclose the referral fee arrangement.

User Contributed Comments 2

User Comment
LoCo83 I may be mistaken, but I felt pretty confident that it should be reasonably assumed that employees could/would make referrals to divisions internal to the same organization they work for. Had this been a referral to an external entity, I could see the conflict, but I don't see why divisions in the same company would be seen as a conflict. Can anyone clarify?
akirchner1 The Standard does not distinguish between external and internal payments for referrals. All referral fees must be disclosed.
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