Lesson 2 of 4 · All lessons in this module
This lesson is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.
Lesson 2 of 4 · 14 min
Standard VI(A) cases: avoiding and disclosing conflicts
Ask whether something could reasonably cloud your objectivity or look biased; avoid it where you reasonably can, and otherwise disclose it prominently and in plain language to those who must judge it: clients, prospects and your employer.
In short
- Three questions: could it reasonably impair independence or look biased? Can it reasonably be avoided (best practice)? If not, has it been disclosed prominently, in plain language, to the right audience?
- Always avoid or disclose issuer relationships: a directorship or consultancy, investment banking or underwriting, market making and material beneficial ownership. Ownership includes the power to vote or dispose, not only a personal financial interest.
- Pay structures are conflicts too: promoter payments, fee rebates and bonus changes that reward short-term results must be disclosed, and updated when they change materially.
- Employers need prompt, detailed reports of ownership in covered companies, outside boards, personal relationships and financial pressures. Members must follow employer restrictions even on mere appearances.
- A tenuous link that could not reasonably affect objectivity needs no disclosure, but boilerplate is no disclosure at all.
Unlock this lesson free for 7 days
Create a free account to get 7 days free: every lesson, video and flashcard, and the question bank. No card needed.