Question #23
Reading: Reading 42.3 Standards of Professional Conduct Guidance for Standards III
PDF File: Reading 42.3 Standards of Professional Conduct Guidance for Standards III.pdf
Page: 9
Status: Correct
Correct Answer: B
Question
Paul Drake, CFA, is employed by Muskie Company to provide investment advice to participants in the firm's defined contribution pension plan. Muskie stock is one of the investment options in the plan. Drake feels that the stock is too risky for employees to own and starts advising them to pull out of the stock. The Treasurer of the company calls Drake and tells him that he will be fired if he continues making such advice because he is violating his fiduciary duty to the company. Drake should most appropriately:
Answer Choices:
A. make sell recommendations but point out that the company Treasurer has a differing and valid point of view
B. continue to advise employees to sell their stock
Explanation
Although Drake is paid by the company, his fiduciary duty is to the plan participants. His
advice cannot be compromised by business considerations, otherwise he will be violating
the Standard on loyalty, prudence, and care.