Explanation:
Standards 2.1 and 2.2—Conflicts of Interest. Members and candidates must act fairly in all situations and must fully disclose any actual or potential conflicts to all affected parties. Sell-side members and candidates should disclose to their clients any ownership of a security that they are recommending.
(Book 1, Module 11.1, LO 11.a)
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Question 27
An investment advisor has a client base composed of high net worth individuals. In her personal portfolio, the advisor has an investment in Torex, a company that has developed software to speed up internet browsing. She has thoroughly researched Torex and believes the company is financially strong yet currently significantly undervalued. According to the GARP Code of Conduct, the investment advisor 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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