CFA Practice Question

CFA Practice Question

West is a CFA charterholder and a trust officer for REO Trust Company. Soon after beginning work for REO, West finds that REO has been conducting all its securities transactions through her brother who is a registered representative. West's brother charges the REO commissions that are equal to the lowest available from any other broker. West's brother tells her that if she continues doing business with him, he will give her a substantial discount on all personal transactions she conducts through him.
A. West must inform her employer of the arrangement because it provides her with additional compensation.
B. West does not need to inform her employer of the arrangement because the commissions her brother charges the firm are the lowest possible.
C. West must inform her employer of the arrangement because she is doing business with a member of her immediate family.
Explanation: According to Standard IV (B) - Additional Compensation Arrangements, members should make an immediate written report to their employer specifying any compensation they receive or propose to receive for services in addition to compensation benefits received from their primary employer.

User Contributed Comments 2

User Comment
chandsingh Granted but does'nt she also have a duty to report ion conflict of interest vis a vis a close member of the family being involved?
MaresaJaden I think A is correct - having a beneficial interest in shares owned by family members that you do business on/with is another story.
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