Arbaaz, an AIMR member, works for an investment advisory firm, Leon Investments. His friend, Shahzad, recently asked him for some investment recommendations. Arbaaz analyzed Shahzad’s portfolio over a weekend and suggested some changes. While he did not accept any remuneration, Shahzad promised him some gifts if his portfolio "performed well." Arbaaz did not inform his employer since he thought he was helping a friend and in any case, the Shahzad’s account was extremely small and there were no financial payments. Arbaaz has:

Arbaaz, an AIMR member, works for an investment advisory firm, Leon Investments. His friend, Shahzad, recently asked him for some investment recommendations. Arbaaz analyzed Shahzad’s portfolio over a weekend and suggested some changes. While he did not accept any remuneration, Shahzad promised him some gifts if his portfolio "performed well." Arbaaz did not inform his employer since he thought he was helping a friend and in any case, the Shahzad’s account was extremely small and there were no financial payments. Arbaaz has:
A . violated Standard III (B), Duty to Employer.
B . has not violated Standard III (B), Duty to Employer, because there was no financial remuneration.
C . has not violated Standard III (B), Duty to Employer, because Shahzad’s account was too small to be deemed lost business for Leon Investments.
D . has not violated Standard III (B), Duty to Employer, because Arbaaz is free to do what he wants on his time as long as it doesn’t affect Leon Investments.

View Answer

Answer: A

Explanation:

While Arbaaz did not receive any monetary compensation, there is a possibility of gifts in the future. Standard III (B) applies even when there is no actual receipt of compensation; what is important is the possibility of future payments in cash or kind. By not obtaining a written permission from his employer before advising Shahzad, Arbaaz violated Standard III (B).