CFA Practice Question

CFA Practice Question

Fredrick Heisenberg, CFA charterholder, manages accounts of several pension funds. Heisenberg knows the AQD Enterprises' CFO socially so he habitually votes with the management on AQD proxies without researching the proxy issues. Is Heisenberg in violation of the Standards?
A. Yes, Duty to Clients.
B. Yes, Diligence and Reasonable Basis.
C. No.
Explanation: May ignore (not vote on) unimportant proxies. If Heisenberg does vote, then he needs to research and vote according to the best interests of the shareholders.

User Contributed Comments 6

User Comment
pstebelp Whay not B? Is Heisneberg conducting diligent work or displaying reasonable basis?
Kenpo The current situation is not making investment choices
Jurrens In order to vote, you need to do your research to know what to vote on. The fact that it says "without researching the proxy issues" leads me to answer B. It's a little ridiculous to assume A. If you invest in something without researching, you violate the diligence and reasonable basis, so this should be the same.
chandsingh I think its more on the loyalty standard under duty to clients
Mikehuynh The question is set in a way to drive us crazy really. Picking the correct answer sometimes depends on our own judgement.
GBolt93 Diligence and Reasonable Basis refers to investment decisions, which this is not.
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