Chartered Alternative Investment Analyst Association (CAIA) Practice Exam

When Martin Remy shared client information with his firm's legal counsel, did he violate any CFA Institute Standard concerning client confidentiality?

1. No, this action complies with the Standard.

2. Yes, he violated the Standard by sharing information with legal counsel.

3. Yes, he violated the Standard by sharing information with Walker.

4. Yes, he violated the Standard in both instances.

The correct answer is: Yes, he violated the Standard by sharing information with legal counsel.

The action of Martin Remy sharing client information with his firm’s legal counsel did indeed violate the CFA Institute Standard concerning client confidentiality. The CFA Institute's Code of Ethics and Standards of Professional Conduct emphasizes the importance of client confidentiality, dictating that members and candidates must keep information about clients private unless they have explicit consent from the client to disclose it. In this scenario, while legal counsel may require access to certain client information for legal purposes, the determination of whether such disclosure adheres to the Standard rests on whether the disclosure is necessary and if the client has consented to it. If Martin shared information without the appropriate consent, he would be breaching the client confidentiality obligation set forth by the CFA Institute. Thus, this breach can have significant implications for trust and professional integrity. The focus of the Standard is not merely on who the information is shared with but rather on ensuring that client confidentiality is maintained in the absence of consent. If the specifics of the case indicate that the legal counsel did not have the requisite authorization to receive this information, the violation would be affirmed. Therefore, the answer emphasizes that sharing client information under these circumstances does constitute a violation of the Standard.