{"id":857,"date":"2019-07-12T17:36:00","date_gmt":"2019-07-12T17:36:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=857"},"modified":"2026-03-10T16:52:58","modified_gmt":"2026-03-10T16:52:58","slug":"standard-3b-fair-dealing","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/ethical-and-professional-standards\/standard-3b-fair-dealing\/","title":{"rendered":"Standard III(B) \u2013 Fair Dealing"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"QAPage\",\n  \"mainEntity\": {\n    \"@type\": \"Question\",\n    \"name\": \"Did David Roberts violate CFA Standard III(B) \u2013 Fair Dealing by calling only some clients after emailing all clients his recommendation?\",\n    \"text\": \"David Roberts receives approval to publish a report recommending a strong sell for Okala, Inc. He emails all clients with the recommendation and attaches the analysis supporting his view. He invites clients to call him for more information. After sending the email, Roberts personally calls several major clients to discuss the recommendation further. According to CFA Standard III(B) \u2013 Fair Dealing, which statement is correct?\\n\\nA. Roberts violated Standard III(B) because he called some but not all clients.\\nB. Roberts violated Standard I(B) \u2013 Independence and Objectivity because he showed partiality toward some clients.\\nC. Roberts did not violate the Code and Standards.\",\n    \"answerCount\": 1,\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"The correct answer is C. Roberts did not violate the Code and Standards because he distributed the recommendation and analysis to all clients simultaneously through email. Providing additional services, such as personal calls to certain clients, is acceptable as long as the core information is shared fairly and at the same time with all clients.\"\n    }\n  }\n}\n<\/script>\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"VideoObject\",\n  \"name\": \"Standard III \u2013 Duties to Clients and Prospective Clients (2025 LI CFA\u00ae Exam \u2013 Ethics\u2013Module 3)\",\n  \"description\": \"This video lesson covers CFA Level 1 Ethics Standard III \u2013 Duties to Clients \u2013 including loyalty, prudence, care, fair dealing, suitability, performance presentation, and confidentiality. It explains key concepts, real-world examples, and exam-relevant applications to help candidates understand and apply ethical obligations in client relationships throughout the investment process.\",\n  \"uploadDate\": \"2022-08-24T00:00:00+00:00\",\n  \"thumbnailUrl\": \"https:\/\/img.youtube.com\/vi\/coTBbAxXxTA\/maxresdefault.jpg\",\n  \"contentUrl\": \"https:\/\/www.youtube.com\/watch?v=coTBbAxXxTA\",\n  \"embedUrl\": \"https:\/\/www.youtube.com\/embed\/coTBbAxXxTA\",\n  \"duration\": \"PT29M09S\"\n}\n<\/script>\n\n\n\n<iframe loading=\"lazy\" width=\"560\" height=\"315\" src=\"https:\/\/www.youtube.com\/embed\/coTBbAxXxTA?si=XzNRQMdSSHKqIprQ\" title=\"YouTube video player\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n\n\n<p>Standard III(B) \u2013 Fair Dealing indicates that CFA members must take advice and\/or take action with all clients in a reasonable and objective manner.<\/p>\n<h2>Compliance<\/h2>\n<p>Standard III(B) \u2013 Fair Dealing urges members to treat all parties fairly to uphold the profession&#8217;s integrity. It is not uncommon for an investment advisor to favor one client over another.\u00a0 This may manifest itself in actions related to response time for advice or perhaps the quality of services provided.<\/p>\n<p>The term \u201cfair\u201d implies that a member must not discriminate in relation to advice or action for individual clients. Although members may differentiate service to clients based on client parameters or individual needs, one is not to differentiate service in a way that will put any client at a disadvantage. For example, an analyst may disseminate an investment recommendation to a client (or group) while a firm is still reviewing the recommendation for accuracy.\u00a0 Even if it is assumed that the firm will approve an analyst\u2019s report\/recommendation, the early distribution to some clients before others put the latter group at a potential disadvantage.\u00a0 Therefore, it is a violation of Standard III(B) \u2013 Fair Dealing.<\/p>\n<h2>Violation<\/h2>\n<p>To avoid violating Standard III(B) \u2013 Fair Dealing, a firm should make recommendations simultaneously to all clients who have expressed an interest in a particular type of security.<\/p>\n<p>Furthermore, disclosure to clients of the process by which investments are allocated will allow clients to assess the fairness of said allocations. Similarly, disclosure of levels of service, fee-based or non-fee-based, should be made to all clients. Varying levels of service should not be offered to some clients but not others.<\/p>\n<blockquote>\n<h2>Question<\/h2>\n<p>David Roberts just received approval from his firm to publish a report on Okala, Inc. in which he recommends a strong \u201csell\u201d based on current reporting and projected product releases.\u00a0 Roberts sends an email to his clients indicating he recommends the sale of Okala.\u00a0 He attaches his analysis to back up the message and requests that clients call him should they have a need for further information.\u00a0 After sending the email, Roberts calls a handful of major clients to personally discuss Okala, Inc. According to Standard III(B) \u2013 Fair Dealing:<\/p>\n<ol style=\"list-style-type: upper-alpha;\">\n<li data-tadv-p=\"keep\">Roberts is in violation of Standard III(B) \u2013 Fair Dealing because he called some but not all clients.<\/li>\n<li data-tadv-p=\"keep\">Roberts is in violation of Standard I(B) \u2013 Independence and Objectivity based on his partiality toward some clients over others.<\/li>\n<li data-tadv-p=\"keep\">Roberts is not in violation of the Code of Standards.<\/li>\n<\/ol>\n<p><strong>Solution<\/strong><\/p>\n<p>The correct answer is C.<\/p>\n<p>Roberts is not in violation because he publicized information to all clients simultaneously via email.\u00a0 It is ethical to provide premium services (i.e., personalized advice via telephone contact) for a fee. Violation of Standard I(B) \u2013 Independence and Objectivity is irrelevant to this situation because it discusses the objectivity of analysis and recommendation rather than the objectivity of client contacts.<\/p>\n<\/blockquote>\n<p><em>Reading 3 LOS 3a<\/em><\/p>\n<p><em>demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations involving issues of professional integrity<\/em><\/p>\n<p><em>Reading 3 LOS 3b<\/em><\/p>\n<p><em>distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards<\/em><\/p>\n<p><em>Reading 3 LOS 3c<\/em><\/p>\n<p><em>recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct<\/em><\/p>\n<div class=\"notes_inv\"><hr \/>\n<p><a href=\"https:\/\/analystprep.com\/cfa-level-1-exam\/ethical-and-professional-standards\/learning-sessions-curriculum-ethical-and-professional-standards\/\"><em>Ethics and Professional Standards &#8211; Learning Sessions<\/em><\/a><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Standard III(B) \u2013 Fair Dealing indicates that CFA members must take advice and\/or take action with all clients in a reasonable and objective manner. Compliance Standard III(B) \u2013 Fair Dealing urges members to treat all parties fairly to uphold the&#8230;<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-857","post","type-post","status-publish","format-standard","hentry","category-ethical-and-professional-standards","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Standard III(B) - Fair Dealing | CFA Level 1 - AnalystPrep<\/title>\n<meta name=\"description\" content=\"Standard III(B) ensures CFA members provide fair and objective treatment to all clients when making investment recommendations or taking action.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/analystprep.com\/cfa-level-1-exam\/ethical-and-professional-standards\/standard-3b-fair-dealing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Standard III(B) - 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