Answer-first summary for fast verification
Answer: No, Kim did not violate the Standards.
**Explanation:** 1. **Discussion with Client:** Kim discussed his concerns with Frost regarding the unsuitability of the trade, fulfilling the requirement under Standard III(C) (Suitability). 2. **Client Acknowledgment:** Frost acknowledged the discussion and accepted the conditions of the unsuitable trade. 3. **Firm Policy:** CGP has no policy requiring approval for unsuitable trades, so Kim was not obligated to seek further approval. 4. **Material Impact:** The trade size (1% of the portfolio) was immaterial, so updating the IPS was unnecessary. According to Standard III(C), members may execute unsuitable trades under these conditions, provided the client acknowledges the discussion and the trade's impact is immaterial. Therefore, Kim did not violate the Standards.
Author: LeetQuiz Editorial Team
Ultimate access to all questions.
Dennis Kim, CFA, manages an investment account for Amelia Frost at Century Growth Partners (CGP). Frost instructs Kim to allocate 1% of her portfolio to biotech stocks, which Kim believes is inconsistent with her investment policy statement (IPS). CGP has no policy regarding unsolicited trade requests. Kim discusses his concerns with Frost, who does not alter her instruction. Without amending the IPS, Kim executes the trade. Did Kim violate the CFA Institute Standards of Professional Conduct?
A
No, Kim did not violate the Standards.
B
Yes, because Kim executed an unsuitable trade for Frost.
C
Yes, because Kim failed to update Frost's investment policy statement before executing the trade.
No comments yet.