Anderson is a portfolio manager at a reputable investment firm, Beta Investments. His job involves managing a diverse set of client portfolios, including institutional clients and high net worth individuals. Anderson is well-respected in the industry and has a track record of strong performance. Recently, Anderson received a report indicating that one of his funds has outperformed its benchmark index significantly over the past three years. The report, however, was produced by an internal analyst who used a different benchmark for comparison that favored the fund's performance. The actual benchmark that should have been used would show that the fund had only performed slightly better than expected, but not significantly. As the fund's performance report is set to be presented to clients at an upcoming meeting, Anderson is faced with a crucial decision: Option 1: Use the misleading performance report when presenting to clients, highlighting the fund's superior returns relative to the favorable benchmark. This could potentially lead to new client investments, bonuses, and accolades for Anderson, as it would enhance his reputation as a successful manager. Option 2: Correct the report by using the appropriate benchmark and present the accurate performance figures to clients, which would show less impressive results. Though this option is ethically sound, Anderson fears it could lead to clients dissatisfaction, loss of potential investment and damaging to his reputation. 1. According to the CFA ethical standards which standards Anderson was breaching? ( 2. How might Anderson's actions affect the trust that clients place on him and the Beta Investments? ( 3. What are the steps Anderson can take to ensure that he adheres to the CFA ethical standards while also mitigating the potential negative impacts on his career and the firm's reputation? 4. What would be the best course of action for Anderson in this ethical dilemma?
Anderson is a
Recently, Anderson received a report indicating that one of his funds has outperformed its benchmark index significantly over the past three years. The report, however, was produced by an internal analyst who used a different benchmark for comparison that favored the fund's performance. The actual benchmark that should have been used would show that the fund had only performed slightly better than expected, but not significantly.
As the fund's performance report is set to be presented to clients at an upcoming meeting, Anderson is faced with a crucial decision:
Option 1:
Use the misleading performance report when presenting to clients, highlighting the fund's superior returns relative to the favorable benchmark. This could potentially lead to new client investments, bonuses, and accolades for Anderson, as it would enhance his reputation as a successful manager.
Option 2:
Correct the report by using the appropriate benchmark and present the accurate performance figures to clients, which would show less impressive results. Though this option is ethically sound, Anderson fears it could lead to clients dissatisfaction, loss of potential investment and damaging to his reputation.
1. According to the CFA ethical standards which standards Anderson was breaching? (
2. How might Anderson's actions affect the trust that clients place on him and the Beta Investments? (
3. What are the steps Anderson can take to ensure that he adheres to the CFA ethical standards while also mitigating the potential negative impacts on his career and the firm's reputation?
4. What would be the best course of action for Anderson in this ethical dilemma?
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