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Answer: Violated the Code by failing to maintain the confidentiality of her client's information.
## Explanation Beth Anderson violated the Code of Ethics by **failing to maintain the confidentiality of her client's information** (Option B). ### Key Points: 1. **Confidentiality Requirement**: FRM professionals have a duty to maintain the confidentiality of client information, even when that information relates to potential illegal activities. 2. **No Exception for Illegal Activities**: The fact that the information pertains to potential tax evasion does not relieve Anderson of her confidentiality obligations. She cannot disclose client information without proper legal authorization. 3. **Improper Disclosure**: Anderson improperly shared confidential client information with her friend at the investment bank, which constitutes a clear violation of confidentiality standards. 4. **Why Other Options Are Incorrect**: - **Option A**: There is no requirement to immediately terminate client relationships upon learning of potential illegal activities. - **Option C**: FRM professionals are not required to detect and report client illegal activities to authorities. - **Option D**: The information being about illegal activities does not justify violating confidentiality requirements. This case demonstrates the importance of maintaining client confidentiality even in challenging circumstances where the client may be involved in questionable activities.
Author: LeetQuiz .
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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