cfaedu

Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. He places trades for the fund with Canadian Brokerage. Canadian provides Calaveccio with soft dollars to purchase research. He uses these soft dollars to get research reports from Canadian's research department regarding the issues currently held in the small cap portfolio, and also for firms he is contemplating adding to the portfolio. These actions are:

A) in violation of his fiduciary duties insofar as both the currently held issue research and research concerning issues contemplated for purchase.

B) in violation of his fiduciary duties insofar as the contemplated issues are concerned but not so regarding research concerning currently held issues.

C) not in violation of the Code and Standards.

D) in violation of his fiduciary duties insofar as the currently held issues are concerned but not so regarding research concerning issues contemplated for purchase.

---

Answer and Explanation

The issue at hand is the member's fiduciary responsibilities in handling "soft dollars, soft pounds, etc.," which are technically the property of the client (in this case the holders of the shares of the Small Cap Venture Fund). Standard III(A) delineates the member's fiduciary responsibilities. Since he is clearly using the soft dollars to obtain research that is directly applicable to his professional duties, there is no violation of the Standard.