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Answer: Violated the Code by failing to maintain the confidentiality of her client's information.
## Explanation **Option B is correct** - Anderson violated the GARP Code of Conduct by failing to maintain client confidentiality. **Key Points**: - **Client Confidentiality**: GARP members have a duty to maintain the confidentiality of client information, even when that information relates to potential illegal activities - **No Duty to Report**: GARP members generally do not have an affirmative duty to report client misconduct to authorities (Option C is incorrect) - **No Immediate Termination Required**: While serious misconduct may warrant termination of the relationship, immediate termination is not required (Option A is incorrect) - **Illegal Activities Don't Justify Disclosure**: The fact that the information pertains to illegal activities does not relieve the member of confidentiality obligations (Option D is incorrect) **GARP Standard**: Members must keep information about current, former, and prospective clients confidential unless: 1. The information concerns illegal activities AND disclosure is required by law 2. The client or prospective client permits disclosure 3. Disclosure is required by the GARP Code of Conduct In this case, none of these exceptions apply.
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Beth Anderson, FRM, is a portfolio manager for several wealthy clients including Reuben Carlyle. Anderson manages Carlyle's personal portfolio of stock and bond investments. Carlyle recently told Anderson that he is under investigation by the IRS for tax evasion related to his business, Carlyle Concrete (CC). After learning about the investigation, Anderson proceeds to inform a friend at a local investment bank so that they may withdraw their proposal to take CC public. Which of the following is most likely correct?
Anderson:
A
Violated the Code by failing to immediately terminate the client relationship with Carlyle.
B
Violated the Code by failing to maintain the confidentiality of her client's information.
C
Violated the Code by failing to detect and report the tax evasion to the proper authorities.
D
Did not violate the Code since the information she conveyed pertained to illegal activities on the part of her client.
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