Question 5
Ralph Reed, CFA, is a portfolio manager at Parker Management, a U.S. equities manager. When clients inquire about fixed income portfolio management, Reed refers them to Ann Foster, who refers clients seeking U.S. equities management to Reed. For clients with an interest in international equities, Reed refers them to Global Advisors and receives $1,000 for each referral that opens an account with them. Which of the following best describes the action Reed must take regarding clients he refers to Parker or to Global?
A.If a referred client opens an account with Parker or with Global, Reed must disclose the arrangement with Parker or amount of the referral fee he receives from Global.
B.At the time he makes a referral to one of these advisors, Reed must disclose the amount of the referral fee from Global, but not the arrangement with Parker.
C.At the time he makes the referral, Reed must disclose the arrangement with Parker, the arrangement with Global, and the amount of the referral fee he receives from Global.
D.At the time he makes a referral, Reed must disclose that he will receive a referral fee from Global, but not the amount or the arrangement with Parker.