Standard III(E) cases: vulnerable investors and cooperation

In short

• The III(A) duty of loyalty and care extends to potentially vulnerable investors: know the red flags of diminished capacity and financial exploitation.
• III(E) keeps client information from third parties, so best practice is to ask every client for a secondary contact at account opening (a family member, legal adviser or other intermediary).
• Without that agreement, disclosures are limited to the account's existence and the concern about vulnerability, as applicable law permits, often to agencies able to investigate.
• A sudden or unusual instruction from a client who understands it is a red flag, not proof of incapacity: follow the client and keep her information from relatives.
• Document every conversation and the reasons for any disclosure in the client file; follow firm policy, training and extra compliance review.
• Members must cooperate with CFA Institute Professional Conduct inquiries into their own conduct and into others' conduct, unless prevented by law.