Chartered Alternative Investment Analyst Association (CAIA) Practice Exam

Which of the following is NOT a requirement under the CFA Institute Standard regarding loyalty to the employer?

1. Members must vote all proxies for their advisory clients.

2. The member must prioritize the employer's interests.

3. A member cannot solicit former clients after leaving a firm.

4. The employee must not conduct actions that harm the employer's interest.

The correct answer is: Members must vote all proxies for their advisory clients.

The principle of loyalty to the employer under the CFA Institute Standards emphasizes the importance of prioritizing the employer’s interests while also maintaining the best interests of clients. The duty of loyalty encompasses various aspects, including avoiding conflicts of interest, not engaging in actions detrimental to the employer, and properly handling client relationships upon departure from a firm. The requirement stating that members must vote all proxies for their advisory clients does not align directly with the loyalty to the employer mandate. While managing client proxies is part of the fiduciary duty to clients, it does not specifically pertain to loyalty to the employer. In fact, the obligation to act in a client's best interests, such as voting proxies, might sometimes conflict with an employer’s direct interests, depending on the circumstances surrounding the voting. Thus, this choice stands out as the one not directly related to the CFA Institute's expectations regarding loyalty to one's employer. In contrast, prioritizing the employer’s interests, not soliciting former clients, and avoiding actions harmful to the employer's interests are all directly tied to maintaining a loyal and ethical relationship between a member and their employer, making them essential components of the standard.