Martha Maris is a qualified investment advisor who has been handling investment accounts of a few wealthy friends for a fee. She recently interviewed with Capital
Management, Inc. and accepted a position as a money manager with them. She:
Click on the arrows to vote for the correct answer
A. B. C. D.B
This is required by Standard III (B) - Duty to Employer.
The correct answer to the question is B. Martha Maris must inform Capital Management as well as all her old clients in writing about the arrangement.
As a qualified investment advisor, Martha Maris has a fiduciary duty to act in the best interest of her clients. When she accepted a position as a money manager with Capital Management, Inc., she entered into a potential conflict of interest situation. This conflict arises because Martha may have access to non-public information and may be inclined to prioritize the interests of her new employer over her existing clients.
To address this conflict of interest and maintain transparency, Martha is required to inform both Capital Management and her old clients about her new employment arrangement. By doing so in writing, she ensures that there is a documented record of the communication.
Informing Capital Management is important because they need to be aware of any potential conflicts of interest that Martha may have, especially if she is managing client accounts. This allows Capital Management to assess the situation and take appropriate measures to mitigate any conflicts or ensure proper management of client accounts.
Informing her old clients is equally crucial. They have entrusted Martha with their investment accounts, and they have a right to know about any changes in her employment that may impact the management of their assets. Disclosing this information to her old clients allows them to make an informed decision about whether they want to continue their relationship with Martha or seek alternative investment advisors.
By informing both Capital Management and her old clients in writing, Martha demonstrates her commitment to transparency, ethics, and fulfilling her fiduciary duty towards her clients. It ensures that all parties involved are aware of the potential conflict of interest and can make informed decisions based on this information.