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Answer: Both referral fees and loyalty, prudence, and care.
**Explanation:** Claus Holm's actions violate both **Standard III(A): Loyalty, Prudence, and Care** and **Standard VI(C): Referral Fees**. 1. **Standard III(A):** Holm's arrangement with RRT involves paying higher commissions without corresponding benefits to his clients, which breaches the duty of loyalty. This is because the higher fees are paid in exchange for client referrals, not for services that benefit the clients directly. 2. **Standard VI(C):** Holm failed to disclose the referral arrangement to his clients and prospective clients, as required by this standard. Members and candidates must inform all relevant parties of any benefits received for referrals. This scenario underscores the importance of transparency and prioritizing client interests in professional conduct.
Author: LeetQuiz Editorial Team
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Claus Holm, CFA, directs most of his clients' trades to RRT Company (RRT), despite RRT's higher-than-average commissions. In return, RRT refers individual clients to Holm for asset management services. Holm does not disclose the arrangement to his clients or prospective clients. Holm has most likely violated the Standard(s) relating to:
A
Referral fees exclusively.
B
Loyalty, prudence, and care exclusively.
C
Both referral fees and loyalty, prudence, and care.
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