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Answer: Recommend Torex to a client, but she must disclose her investment in Torex to the client.
## Explanation According to the GARP Code of Conduct regarding conflicts of interest and disclosure: - **Option A** is incorrect because GARP does not prohibit recommending investments where the advisor has a personal position - **Option B** is incorrect because employer consent alone is not sufficient; disclosure to clients is required - **Option C** is **CORRECT** - GARP requires disclosure of material conflicts of interest to clients. When an investment professional has a personal investment in a security they are recommending, this creates a potential conflict of interest that must be disclosed - **Option D** is incorrect because suitability alone does not eliminate the requirement for disclosure of conflicts **Key Principle**: GARP members must disclose to clients any material conflicts of interest that could reasonably be expected to impair their ability to make unbiased and objective recommendations.
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Isabelle Burns, FRM, is an investment advisor for a firm whose client base is composed of high net worth individuals, in her personal portfolio, Burns has an investment in Torex, a company that has developed software to speed up Internet browsing. Burns has thoroughly researched Torex and believes the company is financially strong yet currently significantly undervalued. According to the GARP Code of Conduct, Burns may:
A
Not recommend Torex as long as she has a personal investment in the stock.
B
Not recommend Torex to a client unless her employer gives written consent to do so.
C
Recommend Torex to a client, but she must disclose her investment in Torex to the client.
D
Recommend Torex to a client without disclosure as long as it is a suitable investment for the client.
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