Lesson 14 of 34 · All lessons in this module
  1. Standard I: ProfessionalismVideo lesson
  2. Standard I cases: knowledge of the law and dissociation
  3. Standard I cases: pressure on analysts and performance staff
  4. Standard I cases: gifts, travel, manager selection and paid research
  5. Standard I cases: misrepresenting services, products and results
  6. Standard I cases: plagiarism, third-party material and online content
  7. Standard I cases: misconduct and competence
  8. Standard II: Integrity of Capital MarketsVideo lesson
  9. Standard II(A) cases: material, nonpublic or mosaic?
  10. Standard II(A) cases: tipping, experts and firm controls
  11. Standard II(B) cases: rumours, trades and intent
  12. Standard II cases: extra 2026 examples and procedures
  13. Standard III(A)–(B): Loyalty, Prudence, Care and Fair DealingVideo lesson
  14. Standard III(A) cases: client identity, loyalty and brokerage
  15. Standard III(B) cases: dissemination, allocation and priority
  16. Standard III(C)–(E): Suitability, Performance Presentation and ConfidentialityVideo lesson
  17. Standard III(C) cases: IPS, total portfolio and mandates
  18. Standard III(D) cases: fair, accurate and complete performance
  19. Standard III(E) cases: exceptions, channels and firm limits
  20. Standard IV: Duties to EmployersVideo lesson
  21. Standard IV(A) cases: loyalty, outside work and leaving
  22. Standard IV(B) and IV(C) cases: outside pay and supervision
  23. Standard V: Investment Analysis, Recommendations, and ActionsVideo lesson
  24. Standard V(A) cases: reasonable basis and outside research
  25. Standard V(A) cases: models, advisers and providers
  26. Standard V(B) cases: services, costs and process changes
  27. Standard V(B) cases: risks, limitations, facts and opinions
  28. Standard V(C) cases: records and retention
  29. Standard VI: Conflicts of InterestVideo lesson
  30. Standard VI(A) cases: avoiding and disclosing conflicts
  31. Standard VI(B) and VI(C) cases: who trades first and who gets paid
  32. Standard VII: Responsibilities as a CFA Institute Member or CFA CandidateVideo lesson
  33. Standard VII(A) cases: exams, confidentiality and volunteering
  34. Standard VII(B) cases: using the designation, membership and candidacy

Lesson 14 of 34 · 16 min

Standard III(A) cases: client identity, loyalty and brokerage

Name the real client, check what the documents allow, then ask who benefits: if the manager, the firm or a favoured party gains at the client's expense, III(A) is breached.

In short

  • First question: who is the client? A plan's beneficiaries (not the sponsor), a fund's mandate (not each fund investor), the honest opinion of an expert witness or the investing public for an analyst.
  • Loyalty is tested by who benefits. A decision taken to win business, protect a friendship or hit a commission target fails even if the security itself is fine.
  • Client brokerage is the client's asset: it may buy research that helps the client at a reasonable cost, or follow the client's own direction. It may never carry the manager's overheads, perks or education.
  • Seek best execution unless the client directs otherwise, and warn that directed brokerage may cost it. Rewarding a broker with other clients' flow needs best execution and disclosure to those accounts.
  • Proxies are assets: vote them after thought, use cost-benefit analysis to pick the votes worth casting, and publish the policy. A vote cast to please management or the sponsor is a breach.
  • The role changes the content of the duty, not the principle: execution-only and blended roles still owe loyalty, prudence and care, without becoming fiduciaries or suitability advisers.

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