Heidi Halvorson, CFA, is the chief investment officer for Tukwila Investors, an asset managementfirm specializing in fixed-income investments. Tukwila is in danger of losing one of its largest clients,Quinault Jewelers, which accounts for nearly one-third of its revenues. Quinault recently told Halverson that Tukwila would be fired unless the performance of Quinault's portfolio improvessignificantly. Shortly after this conversation, Halvorson purchases two corporate bonds she believesare suitable for any of her clients based on third-party research from a reliable and diligent source.Immediately after the purchase, one bond increases significantly in price while the other bonddeclines significantly. At the end of the day, Halvorson allocates the profitable bond trade to Quinaultand the other bond to two of her largest institutional accounts. Halvorson most likely violated the CFA Institute Standards of Professional Conduct in regard to:
The investment officer failed to deal fairly by allocating profitable trades to a favored client at the expense of others, a violation of Standard Ill(B): Fair Dealing. The standard requires members and candidates to treat all clients fairly when taking investment action. Tukwila should have a systematic approach to allocating trades, such as pro rata, before or at the time of tradeexecution, or as soon as possible after trades are executed. The analyst believes the bonds are suitable for any of her clients, so she has not violated Standard Ill(C): Suitability.