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Answer: No.
## Explanation **Correct Answer: A (No)** **Analysis of the Situation:** 1. **Premium Services Communication Issue**: Hilbert offered premium services to all clients via email. One client didn't receive the offer due to a technical problem with the client's email system. This does not violate the Standard relating to communication with clients and prospective clients because: - She communicated the offer to all clients - The failure was due to the client's email system, not Hilbert's actions - She used a reasonable method of communication (email) that is standard practice 2. **IPO Allocation Decision**: Hilbert excluded her sister from the IPO allocation to free up shares for other clients. This actually demonstrates **fair dealing** rather than violating it because: - She prioritized other clients over a family member - This avoids potential conflicts of interest or appearance of favoritism - She acted in the best interests of her clients as a group **Key Standards Considered:** - **Standard III(B): Fair Dealing** - Members must deal fairly and objectively with all clients when providing investment analysis, making investment recommendations, taking investment action, or engaging in other professional activities. - **Standard III(C): Suitability** - Not relevant here. - **Standard V(B): Communication with Clients and Prospective Clients** - Members must communicate with clients in a timely and accurate manner. **Why Other Options Are Incorrect:** - **Option B (Fair Dealing)**: Hilbert's actions actually demonstrate fair dealing by excluding her sister to benefit other clients. - **Option C (Communication)**: The communication failure was due to the client's email system, not Hilbert's failure to communicate. She used a reasonable method to reach all clients. **Conclusion**: Hilbert has not violated any CFA Institute Standards of Professional Conduct. Her actions demonstrate appropriate professional conduct by using standard communication methods and avoiding potential conflicts of interest with family members.
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Lucie Hilbert, CFA, offers premium services to clients for an additional fee. She offers the premium services only by email to all of her clients. One client, who previously inquired about premium services, does not receive the offer due to a technical problem with the client's email system. One week later Hilbert makes an investment in an IPO on behalf of her clients. The issue is oversubscribed, so she excludes her sister, a regular fee-paying client of Hilbert's firm, to free up shares for other clients. Has Hilbert most likely violated the Standards?
A
No.
B
Yes, the Standard relating to fair dealing.
C
Yes, the Standard relating to communication with clients and prospective clients.