Explanation

Correct Answer: A (No)

John Chapman has not violated the Standard relating to fair dealing for the following reasons:

1. Premium Service Offering

• Chapman offers premium service only to clients he believes would benefit from it in exchange for higher fees.
• This is not a violation because:
  • He is offering an additional service for additional fees, not providing preferential treatment for the same service.
  • All clients receive the standard service they pay for.
  • Premium services can be offered selectively as long as they represent genuinely different service levels.

2. Investment Recommendation Distribution

• Chapman distributes an investment recommendation only to clients for whom he deems it suitable.
• This is required by the Standards, not a violation:
  • CFA Institute Standards require investment professionals to only recommend investments suitable for each client.
  • Distributing unsuitable recommendations would violate suitability standards.
  • Fair dealing does not require distributing all recommendations to all clients regardless of suitability.

3. Fair Dealing Standard (Standard III(B))

• The Standard on Fair Dealing requires that:
  • Investment recommendations be made on a fair and objective basis
  • All clients who would be interested in a recommendation receive it simultaneously
  • However, this applies only to clients for whom the recommendation is suitable

Key Distinction:

• Fair dealing ≠ Equal treatment for all clients
• Fair dealing means fair treatment among clients with similar objectives and constraints
• Different clients with different needs, objectives, and constraints should receive different recommendations

What Would Be Violations:**

1. Offering premium service to select clients without charging higher fees (giving preferential treatment)
2. Distributing recommendations to some suitable clients but not others without valid reason
3. Delaying distribution to some clients while giving others advance notice

In this case, Chapman's actions are consistent with both suitability requirements and fair dealing principles.