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Ethical and Professional Standards Q62

0. Bryan Lee, CFA, works as a fund manager for Westlink Securities which historically has focused on US equities. Due to his past experience, Lee is also knowledgeable about emerging markets. After discussing the matter with the Chief Investment Officer (CIO) of Westlink, he decides to extend his fund‟s investment universe to include equities from emerging markets. The firm‟s marketing and promotional literature is updated to reflect the change in investment strategy. Has Lee violated any Standard?

  • Option : B
  • Explanation : Westlink and Lee’s current clients need to be informed along with the prospective clients, of the change in the fund’s mandate since they might have objections concerning the Fund’s new allocations. Hence Standard V(B) Communications with Clients and Prospective Clients is most likely violated. Significant risks and limitations of the new investments should also be disclosed along with their impact on the fund as a whole.
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