Ethical and Professional Standards

Corinne Abelard is a research analyst at Marlowe Investment Research, which sells fixed income research to subscribers and manages portfolios for private clients. Its research subscribers include both institutions and individual investors. In August she learned that she had passed the Level III exam of the CFA Program. She expects to receive her charter next year, once CFA Institute confirms her work experience; she is not yet a charterholder and remains a candidate in the CFA Program until the charter is awarded.

In September Abelard ordered new business cards that read "Corinne Abelard, CFA Level III." Her online profile states: "I passed all three levels of the CFA exam on my first attempt." This statement is accurate.

Since the summer, Abelard has been giving paid investment advice on weekends to several friends and their relatives, recommending bonds and funds for their portfolios. Marlowe offers the same kind of advice to its private clients. Abelard has not told Marlowe about this work.

Abelard also writes Marlowe's monthly report on high-yield funds, sent to all of the firm's research subscribers. Her latest report recommends the Strand Credit Income Fund, highlighting its 9% yield. Strand invests mainly in unrated private loans that trade rarely and may be hard to sell in a market downturn, and the fund can suspend redemptions for up to six months. The report mentions neither the fund's holdings of private loans nor its ability to suspend redemptions; it ends with the line "past performance is no guarantee of future results."

Corinne Abelard is a research analyst at Marlowe Investment Research, which sells fixed income research to subscribers and manages portfolios for private clients. Its research subscribers include both institutions and individual investors. In August she learned that she had passed the Level III exam of the CFA Program. She expects to receive her charter next year, once CFA Institute confirms her work experience; she is not yet a charterholder and remains a candidate in the CFA Program until the charter is awarded.

In September Abelard ordered new business cards that read "Corinne Abelard, CFA Level III." Her online profile states: "I passed all three levels of the CFA exam on my first attempt." This statement is accurate.

Since the summer, Abelard has been giving paid investment advice on weekends to several friends and their relatives, recommending bonds and funds for their portfolios. Marlowe offers the same kind of advice to its private clients. Abelard has not told Marlowe about this work.

Abelard also writes Marlowe's monthly report on high-yield funds, sent to all of the firm's research subscribers. Her latest report recommends the Strand Credit Income Fund, highlighting its 9% yield. Strand invests mainly in unrated private loans that trade rarely and may be hard to sell in a market downturn, and the fund can suspend redemptions for up to six months. The report mentions neither the fund's holdings of private loans nor its ability to suspend redemptions; it ends with the line "past performance is no guarantee of future results."

Corinne Abelard is a research analyst at Marlowe Investment Research, which sells fixed income research to subscribers and manages portfolios for private clients. Its research subscribers include both institutions and individual investors. In August she learned that she had passed the Level III exam of the CFA Program. She expects to receive her charter next year, once CFA Institute confirms her work experience; she is not yet a charterholder and remains a candidate in the CFA Program until the charter is awarded.

In September Abelard ordered new business cards that read "Corinne Abelard, CFA Level III." Her online profile states: "I passed all three levels of the CFA exam on my first attempt." This statement is accurate.

Since the summer, Abelard has been giving paid investment advice on weekends to several friends and their relatives, recommending bonds and funds for their portfolios. Marlowe offers the same kind of advice to its private clients. Abelard has not told Marlowe about this work.

Abelard also writes Marlowe's monthly report on high-yield funds, sent to all of the firm's research subscribers. Her latest report recommends the Strand Credit Income Fund, highlighting its 9% yield. Strand invests mainly in unrated private loans that trade rarely and may be hard to sell in a market downturn, and the fund can suspend redemptions for up to six months. The report mentions neither the fund's holdings of private loans nor its ability to suspend redemptions; it ends with the line "past performance is no guarantee of future results."

Daniel Abara, CFA, was a portfolio manager at Corran Wealth Partners for nine years. He had no employment contract restricting his activities after leaving Corran, and he signed no noncompete or nonsolicitation agreement. Corran manages about $3 billion for individual clients, and Abara's accounts made up about a tenth of that.

Early last year, Abara's client Fiona Wells offered to pay him personally 1% of any gain by which her portfolio beat its benchmark over the coming twelve months, in addition to the fees she paid Corran. Abara mentioned the offer to his manager in a hallway conversation, and his manager said "sounds fine." Abara accepted the arrangement and did not seek written approval. Wells's portfolio beat its benchmark, and she paid Abara $18,000.

Later in the year Abara decided to start his own investment advisory firm. Over several weekends, using his own computer and money, he registered the new firm with the regulator, leased office space and bought portfolio software. He did not contact any Corran clients about his plans, and he continued to perform all of his duties at Corran.

In his last week at Corran, Abara forwarded to his personal email account a spreadsheet from Corran's client database listing the names, contact details and account values of the 85 clients he managed.

Two weeks after leaving Corran, Abara began contacting former clients to tell them about his new firm. For this he used client names he remembered and contact details from public directories, not Corran records. Several clients moved their accounts to his new firm.

Daniel Abara, CFA, was a portfolio manager at Corran Wealth Partners for nine years. He had no employment contract restricting his activities after leaving Corran, and he signed no noncompete or nonsolicitation agreement. Corran manages about $3 billion for individual clients, and Abara's accounts made up about a tenth of that.

Early last year, Abara's client Fiona Wells offered to pay him personally 1% of any gain by which her portfolio beat its benchmark over the coming twelve months, in addition to the fees she paid Corran. Abara mentioned the offer to his manager in a hallway conversation, and his manager said "sounds fine." Abara accepted the arrangement and did not seek written approval. Wells's portfolio beat its benchmark, and she paid Abara $18,000.

Later in the year Abara decided to start his own investment advisory firm. Over several weekends, using his own computer and money, he registered the new firm with the regulator, leased office space and bought portfolio software. He did not contact any Corran clients about his plans, and he continued to perform all of his duties at Corran.

In his last week at Corran, Abara forwarded to his personal email account a spreadsheet from Corran's client database listing the names, contact details and account values of the 85 clients he managed.

Two weeks after leaving Corran, Abara began contacting former clients to tell them about his new firm. For this he used client names he remembered and contact details from public directories, not Corran records. Several clients moved their accounts to his new firm.

Daniel Abara, CFA, was a portfolio manager at Corran Wealth Partners for nine years. He had no employment contract restricting his activities after leaving Corran, and he signed no noncompete or nonsolicitation agreement. Corran manages about $3 billion for individual clients, and Abara's accounts made up about a tenth of that.

Early last year, Abara's client Fiona Wells offered to pay him personally 1% of any gain by which her portfolio beat its benchmark over the coming twelve months, in addition to the fees she paid Corran. Abara mentioned the offer to his manager in a hallway conversation, and his manager said "sounds fine." Abara accepted the arrangement and did not seek written approval. Wells's portfolio beat its benchmark, and she paid Abara $18,000.

Later in the year Abara decided to start his own investment advisory firm. Over several weekends, using his own computer and money, he registered the new firm with the regulator, leased office space and bought portfolio software. He did not contact any Corran clients about his plans, and he continued to perform all of his duties at Corran.

In his last week at Corran, Abara forwarded to his personal email account a spreadsheet from Corran's client database listing the names, contact details and account values of the 85 clients he managed.

Two weeks after leaving Corran, Abara began contacting former clients to tell them about his new firm. For this he used client names he remembered and contact details from public directories, not Corran records. Several clients moved their accounts to his new firm.

Daniel Abara, CFA, was a portfolio manager at Corran Wealth Partners for nine years. He had no employment contract restricting his activities after leaving Corran, and he signed no noncompete or nonsolicitation agreement. Corran manages about $3 billion for individual clients, and Abara's accounts made up about a tenth of that.

Early last year, Abara's client Fiona Wells offered to pay him personally 1% of any gain by which her portfolio beat its benchmark over the coming twelve months, in addition to the fees she paid Corran. Abara mentioned the offer to his manager in a hallway conversation, and his manager said "sounds fine." Abara accepted the arrangement and did not seek written approval. Wells's portfolio beat its benchmark, and she paid Abara $18,000.

Later in the year Abara decided to start his own investment advisory firm. Over several weekends, using his own computer and money, he registered the new firm with the regulator, leased office space and bought portfolio software. He did not contact any Corran clients about his plans, and he continued to perform all of his duties at Corran.

In his last week at Corran, Abara forwarded to his personal email account a spreadsheet from Corran's client database listing the names, contact details and account values of the 85 clients he managed.

Two weeks after leaving Corran, Abara began contacting former clients to tell them about his new firm. For this he used client names he remembered and contact details from public directories, not Corran records. Several clients moved their accounts to his new firm.

Milo Brandt, CFA, is a portfolio manager at Hesketh Fund Management and approves the marketing materials for his team. Hesketh manages about $12 billion in mutual funds and separate accounts, and Brandt has worked there for eleven years.

Brandt decided to buy 500,000 shares of Ridley Chemicals for the fund he manages, an order he expected to push the share price up. Before sending the fund's order to the trading desk, he bought 2,000 Ridley shares in his own brokerage account. The fund's order was filled an hour later at a higher price.

Brandt's father has a discretionary account at Hesketh and pays the firm's standard fees. When Brandt buys or sells a security for a group of client accounts, he includes his father's account in the same block trade whenever the security suits his father's objectives, and allocates shares to it pro rata at the average price, exactly as for the other accounts.

Nina Castell, a member of Brandt's team, sat the Level II exam of the CFA Program last month. The day after the exam she posted on an online study forum: "Expect at least two item sets on currency carry trades this year, and make sure you know the covered interest rate parity formula cold, because it came up repeatedly."

A new Hesketh brochure, which Brandt approved, includes the statement: "Because our portfolio managers are CFA charterholders, they achieve superior investment performance for our clients." Hesketh's funds have performed about in line with their benchmarks over the past five years.

Milo Brandt, CFA, is a portfolio manager at Hesketh Fund Management and approves the marketing materials for his team. Hesketh manages about $12 billion in mutual funds and separate accounts, and Brandt has worked there for eleven years.

Brandt decided to buy 500,000 shares of Ridley Chemicals for the fund he manages, an order he expected to push the share price up. Before sending the fund's order to the trading desk, he bought 2,000 Ridley shares in his own brokerage account. The fund's order was filled an hour later at a higher price.

Brandt's father has a discretionary account at Hesketh and pays the firm's standard fees. When Brandt buys or sells a security for a group of client accounts, he includes his father's account in the same block trade whenever the security suits his father's objectives, and allocates shares to it pro rata at the average price, exactly as for the other accounts.

Nina Castell, a member of Brandt's team, sat the Level II exam of the CFA Program last month. The day after the exam she posted on an online study forum: "Expect at least two item sets on currency carry trades this year, and make sure you know the covered interest rate parity formula cold, because it came up repeatedly."

A new Hesketh brochure, which Brandt approved, includes the statement: "Because our portfolio managers are CFA charterholders, they achieve superior investment performance for our clients." Hesketh's funds have performed about in line with their benchmarks over the past five years.

Milo Brandt, CFA, is a portfolio manager at Hesketh Fund Management and approves the marketing materials for his team. Hesketh manages about $12 billion in mutual funds and separate accounts, and Brandt has worked there for eleven years.

Brandt decided to buy 500,000 shares of Ridley Chemicals for the fund he manages, an order he expected to push the share price up. Before sending the fund's order to the trading desk, he bought 2,000 Ridley shares in his own brokerage account. The fund's order was filled an hour later at a higher price.

Brandt's father has a discretionary account at Hesketh and pays the firm's standard fees. When Brandt buys or sells a security for a group of client accounts, he includes his father's account in the same block trade whenever the security suits his father's objectives, and allocates shares to it pro rata at the average price, exactly as for the other accounts.

Nina Castell, a member of Brandt's team, sat the Level II exam of the CFA Program last month. The day after the exam she posted on an online study forum: "Expect at least two item sets on currency carry trades this year, and make sure you know the covered interest rate parity formula cold, because it came up repeatedly."

A new Hesketh brochure, which Brandt approved, includes the statement: "Because our portfolio managers are CFA charterholders, they achieve superior investment performance for our clients." Hesketh's funds have performed about in line with their benchmarks over the past five years.

Priya Natesan, CFA, is a portfolio manager at Kestrel Ridge Advisors, a registered investment adviser that manages equity portfolios for individuals and charitable foundations. Kestrel Ridge's code of conduct requires employees to report any gift worth more than $100 to the compliance department.

Over the past year Natesan has moved a larger share of her trading to Brightline Securities, whose execution quality she rates highly. Brightline now handles about a third of her orders. Last month a Brightline sales manager invited Natesan to spend a weekend at a luxury ski resort, with travel, lodging and lift passes paid by Brightline, a package worth about $4,000. Natesan accepted and did not mention the trip to anyone at Kestrel Ridge.

Arthur Penrose, a client for twelve years, sent Natesan a watch worth about $1,500 with a note thanking her for his account's strong returns in the previous calendar year. The same day, Natesan reported the gift in writing to her supervisor and to compliance, and she kept the watch.

Kestrel Ridge's research team decided to cut its rating on Holbrook Foods from buy to sell. Under the firm's procedures, rating changes are emailed to all clients and portfolio managers at 9:00 a.m. on the day of release. Natesan learned of the downgrade the evening before. At 8:15 a.m. on the release day she telephoned her three largest clients, who hold Holbrook shares, and told them about the downgrade. All three sold their shares before the 9:00 a.m. email was sent.

A former client of Natesan's later filed a complaint with CFA Institute alleging that she had made unsuitable trades in his account. The CFA Institute Professional Conduct Program asked Natesan for documents relating to the account. Natesan sent the investigator copies of the former client's investment policy statement, account statements and her meeting notes, without asking the former client's permission.

Priya Natesan, CFA, is a portfolio manager at Kestrel Ridge Advisors, a registered investment adviser that manages equity portfolios for individuals and charitable foundations. Kestrel Ridge's code of conduct requires employees to report any gift worth more than $100 to the compliance department.

Over the past year Natesan has moved a larger share of her trading to Brightline Securities, whose execution quality she rates highly. Brightline now handles about a third of her orders. Last month a Brightline sales manager invited Natesan to spend a weekend at a luxury ski resort, with travel, lodging and lift passes paid by Brightline, a package worth about $4,000. Natesan accepted and did not mention the trip to anyone at Kestrel Ridge.

Arthur Penrose, a client for twelve years, sent Natesan a watch worth about $1,500 with a note thanking her for his account's strong returns in the previous calendar year. The same day, Natesan reported the gift in writing to her supervisor and to compliance, and she kept the watch.

Kestrel Ridge's research team decided to cut its rating on Holbrook Foods from buy to sell. Under the firm's procedures, rating changes are emailed to all clients and portfolio managers at 9:00 a.m. on the day of release. Natesan learned of the downgrade the evening before. At 8:15 a.m. on the release day she telephoned her three largest clients, who hold Holbrook shares, and told them about the downgrade. All three sold their shares before the 9:00 a.m. email was sent.

A former client of Natesan's later filed a complaint with CFA Institute alleging that she had made unsuitable trades in his account. The CFA Institute Professional Conduct Program asked Natesan for documents relating to the account. Natesan sent the investigator copies of the former client's investment policy statement, account statements and her meeting notes, without asking the former client's permission.

Priya Natesan, CFA, is a portfolio manager at Kestrel Ridge Advisors, a registered investment adviser that manages equity portfolios for individuals and charitable foundations. Kestrel Ridge's code of conduct requires employees to report any gift worth more than $100 to the compliance department.

Over the past year Natesan has moved a larger share of her trading to Brightline Securities, whose execution quality she rates highly. Brightline now handles about a third of her orders. Last month a Brightline sales manager invited Natesan to spend a weekend at a luxury ski resort, with travel, lodging and lift passes paid by Brightline, a package worth about $4,000. Natesan accepted and did not mention the trip to anyone at Kestrel Ridge.

Arthur Penrose, a client for twelve years, sent Natesan a watch worth about $1,500 with a note thanking her for his account's strong returns in the previous calendar year. The same day, Natesan reported the gift in writing to her supervisor and to compliance, and she kept the watch.

Kestrel Ridge's research team decided to cut its rating on Holbrook Foods from buy to sell. Under the firm's procedures, rating changes are emailed to all clients and portfolio managers at 9:00 a.m. on the day of release. Natesan learned of the downgrade the evening before. At 8:15 a.m. on the release day she telephoned her three largest clients, who hold Holbrook shares, and told them about the downgrade. All three sold their shares before the 9:00 a.m. email was sent.

A former client of Natesan's later filed a complaint with CFA Institute alleging that she had made unsuitable trades in his account. The CFA Institute Professional Conduct Program asked Natesan for documents relating to the account. Natesan sent the investigator copies of the former client's investment policy statement, account statements and her meeting notes, without asking the former client's permission.

Priya Natesan, CFA, is a portfolio manager at Kestrel Ridge Advisors, a registered investment adviser that manages equity portfolios for individuals and charitable foundations. Kestrel Ridge's code of conduct requires employees to report any gift worth more than $100 to the compliance department.

Over the past year Natesan has moved a larger share of her trading to Brightline Securities, whose execution quality she rates highly. Brightline now handles about a third of her orders. Last month a Brightline sales manager invited Natesan to spend a weekend at a luxury ski resort, with travel, lodging and lift passes paid by Brightline, a package worth about $4,000. Natesan accepted and did not mention the trip to anyone at Kestrel Ridge.

Arthur Penrose, a client for twelve years, sent Natesan a watch worth about $1,500 with a note thanking her for his account's strong returns in the previous calendar year. The same day, Natesan reported the gift in writing to her supervisor and to compliance, and she kept the watch.

Kestrel Ridge's research team decided to cut its rating on Holbrook Foods from buy to sell. Under the firm's procedures, rating changes are emailed to all clients and portfolio managers at 9:00 a.m. on the day of release. Natesan learned of the downgrade the evening before. At 8:15 a.m. on the release day she telephoned her three largest clients, who hold Holbrook shares, and told them about the downgrade. All three sold their shares before the 9:00 a.m. email was sent.

A former client of Natesan's later filed a complaint with CFA Institute alleging that she had made unsuitable trades in his account. The CFA Institute Professional Conduct Program asked Natesan for documents relating to the account. Natesan sent the investigator copies of the former client's investment policy statement, account statements and her meeting notes, without asking the former client's permission.

Elaine Marsh, CFA, was recently promoted to director of research at Pellham Securities, a broker-dealer, with responsibility for supervising its twelve equity analysts.

When she took the role, Marsh found that Pellham had no written policies or procedures on analysts' personal trading. She accepted supervisory responsibility for the analysts without raising the matter with senior management, and she told a colleague she would "get to procedures sometime next year." No procedures have yet been drafted.

Two months later, a trader told Marsh that one of her analysts, Gregory Tain, appeared to have bought shares in his own account shortly before each of his last three buy recommendations was published. Marsh sent Tain an email reminding him that front-running clients is prohibited. She did not review his trading records, restrict his activities or report the matter to anyone else. Tain's pattern of trading has continued.

Analyst Kara Voss published a buy recommendation on Ordway Pharmaceuticals supported by a detailed earnings model. To free space on the firm's server, she deleted her model, notes and supporting files a week after publication. No regulation in Pellham's jurisdiction sets a period for keeping research records, and Pellham has no policy on the matter.

Pellham issues some of its reports through a research committee. The committee met three times, reviewed detailed analysis and voted to rate Rowan Mining a buy. Analyst Ben Ashford, a committee member, believes the shares are fairly valued and voted against the rating, but he agrees the committee's research was thorough. The published report lists the committee members, including Ashford, as its authors. Ashford did not ask for his name to be removed.

Elaine Marsh, CFA, was recently promoted to director of research at Pellham Securities, a broker-dealer, with responsibility for supervising its twelve equity analysts.

When she took the role, Marsh found that Pellham had no written policies or procedures on analysts' personal trading. She accepted supervisory responsibility for the analysts without raising the matter with senior management, and she told a colleague she would "get to procedures sometime next year." No procedures have yet been drafted.

Two months later, a trader told Marsh that one of her analysts, Gregory Tain, appeared to have bought shares in his own account shortly before each of his last three buy recommendations was published. Marsh sent Tain an email reminding him that front-running clients is prohibited. She did not review his trading records, restrict his activities or report the matter to anyone else. Tain's pattern of trading has continued.

Analyst Kara Voss published a buy recommendation on Ordway Pharmaceuticals supported by a detailed earnings model. To free space on the firm's server, she deleted her model, notes and supporting files a week after publication. No regulation in Pellham's jurisdiction sets a period for keeping research records, and Pellham has no policy on the matter.

Pellham issues some of its reports through a research committee. The committee met three times, reviewed detailed analysis and voted to rate Rowan Mining a buy. Analyst Ben Ashford, a committee member, believes the shares are fairly valued and voted against the rating, but he agrees the committee's research was thorough. The published report lists the committee members, including Ashford, as its authors. Ashford did not ask for his name to be removed.

Elaine Marsh, CFA, was recently promoted to director of research at Pellham Securities, a broker-dealer, with responsibility for supervising its twelve equity analysts.

When she took the role, Marsh found that Pellham had no written policies or procedures on analysts' personal trading. She accepted supervisory responsibility for the analysts without raising the matter with senior management, and she told a colleague she would "get to procedures sometime next year." No procedures have yet been drafted.

Two months later, a trader told Marsh that one of her analysts, Gregory Tain, appeared to have bought shares in his own account shortly before each of his last three buy recommendations was published. Marsh sent Tain an email reminding him that front-running clients is prohibited. She did not review his trading records, restrict his activities or report the matter to anyone else. Tain's pattern of trading has continued.

Analyst Kara Voss published a buy recommendation on Ordway Pharmaceuticals supported by a detailed earnings model. To free space on the firm's server, she deleted her model, notes and supporting files a week after publication. No regulation in Pellham's jurisdiction sets a period for keeping research records, and Pellham has no policy on the matter.

Pellham issues some of its reports through a research committee. The committee met three times, reviewed detailed analysis and voted to rate Rowan Mining a buy. Analyst Ben Ashford, a committee member, believes the shares are fairly valued and voted against the rating, but he agrees the committee's research was thorough. The published report lists the committee members, including Ashford, as its authors. Ashford did not ask for his name to be removed.

Elaine Marsh, CFA, was recently promoted to director of research at Pellham Securities, a broker-dealer, with responsibility for supervising its twelve equity analysts.

When she took the role, Marsh found that Pellham had no written policies or procedures on analysts' personal trading. She accepted supervisory responsibility for the analysts without raising the matter with senior management, and she told a colleague she would "get to procedures sometime next year." No procedures have yet been drafted.

Two months later, a trader told Marsh that one of her analysts, Gregory Tain, appeared to have bought shares in his own account shortly before each of his last three buy recommendations was published. Marsh sent Tain an email reminding him that front-running clients is prohibited. She did not review his trading records, restrict his activities or report the matter to anyone else. Tain's pattern of trading has continued.

Analyst Kara Voss published a buy recommendation on Ordway Pharmaceuticals supported by a detailed earnings model. To free space on the firm's server, she deleted her model, notes and supporting files a week after publication. No regulation in Pellham's jurisdiction sets a period for keeping research records, and Pellham has no policy on the matter.

Pellham issues some of its reports through a research committee. The committee met three times, reviewed detailed analysis and voted to rate Rowan Mining a buy. Analyst Ben Ashford, a committee member, believes the shares are fairly valued and voted against the rating, but he agrees the committee's research was thorough. The published report lists the committee members, including Ashford, as its authors. Ashford did not ask for his name to be removed.

Marcus Feld, CFA, is a financial adviser at Wrenfield Wealth, where he manages discretionary portfolios for individual clients.

Robert Haines, 45, opened an account with Wrenfield after a ten-minute telephone call with Feld. During the call Feld asked Haines how many holdings he preferred and how often he wanted statements, but nothing about his objectives, risk tolerance, time horizon or other constraints. Feld then invested Haines's $2 million in Wrenfield's Growth 80 model portfolio, which holds 80% equities and 20% bonds.

Dorothy Quint, a retired client, has a written investment policy statement (IPS) that calls for a conservative, income-oriented portfolio. Quint called Feld and asked him to buy $20,000 of shares in a speculative mining company, about 1% of her portfolio. Feld told her the purchase was inconsistent with her IPS and explained the risks. Quint said she understood and still wanted the shares. Feld recorded the conversation in her file and placed the order.

Samuel Ortiz has been a client for five years. Two years ago Ortiz told Feld that he had sold his business and retired, so he would now need regular withdrawals from his portfolio to cover living costs. Feld has not met Ortiz or reviewed or updated his IPS since the account was opened, and Ortiz's portfolio remains invested for long-term growth with no provision for withdrawals.

To attract new clients, Feld prepared a brochure showing the one-, three- and five-year returns of the five accounts he manages that have performed best. The brochure describes these figures as "representative client results." Feld manages 140 accounts, and the five shown beat the median account by more than four percentage points a year.

Marcus Feld, CFA, is a financial adviser at Wrenfield Wealth, where he manages discretionary portfolios for individual clients.

Robert Haines, 45, opened an account with Wrenfield after a ten-minute telephone call with Feld. During the call Feld asked Haines how many holdings he preferred and how often he wanted statements, but nothing about his objectives, risk tolerance, time horizon or other constraints. Feld then invested Haines's $2 million in Wrenfield's Growth 80 model portfolio, which holds 80% equities and 20% bonds.

Dorothy Quint, a retired client, has a written investment policy statement (IPS) that calls for a conservative, income-oriented portfolio. Quint called Feld and asked him to buy $20,000 of shares in a speculative mining company, about 1% of her portfolio. Feld told her the purchase was inconsistent with her IPS and explained the risks. Quint said she understood and still wanted the shares. Feld recorded the conversation in her file and placed the order.

Samuel Ortiz has been a client for five years. Two years ago Ortiz told Feld that he had sold his business and retired, so he would now need regular withdrawals from his portfolio to cover living costs. Feld has not met Ortiz or reviewed or updated his IPS since the account was opened, and Ortiz's portfolio remains invested for long-term growth with no provision for withdrawals.

To attract new clients, Feld prepared a brochure showing the one-, three- and five-year returns of the five accounts he manages that have performed best. The brochure describes these figures as "representative client results." Feld manages 140 accounts, and the five shown beat the median account by more than four percentage points a year.

Marcus Feld, CFA, is a financial adviser at Wrenfield Wealth, where he manages discretionary portfolios for individual clients.

Robert Haines, 45, opened an account with Wrenfield after a ten-minute telephone call with Feld. During the call Feld asked Haines how many holdings he preferred and how often he wanted statements, but nothing about his objectives, risk tolerance, time horizon or other constraints. Feld then invested Haines's $2 million in Wrenfield's Growth 80 model portfolio, which holds 80% equities and 20% bonds.

Dorothy Quint, a retired client, has a written investment policy statement (IPS) that calls for a conservative, income-oriented portfolio. Quint called Feld and asked him to buy $20,000 of shares in a speculative mining company, about 1% of her portfolio. Feld told her the purchase was inconsistent with her IPS and explained the risks. Quint said she understood and still wanted the shares. Feld recorded the conversation in her file and placed the order.

Samuel Ortiz has been a client for five years. Two years ago Ortiz told Feld that he had sold his business and retired, so he would now need regular withdrawals from his portfolio to cover living costs. Feld has not met Ortiz or reviewed or updated his IPS since the account was opened, and Ortiz's portfolio remains invested for long-term growth with no provision for withdrawals.

To attract new clients, Feld prepared a brochure showing the one-, three- and five-year returns of the five accounts he manages that have performed best. The brochure describes these figures as "representative client results." Feld manages 140 accounts, and the five shown beat the median account by more than four percentage points a year.

Marcus Feld, CFA, is a financial adviser at Wrenfield Wealth, where he manages discretionary portfolios for individual clients.

Robert Haines, 45, opened an account with Wrenfield after a ten-minute telephone call with Feld. During the call Feld asked Haines how many holdings he preferred and how often he wanted statements, but nothing about his objectives, risk tolerance, time horizon or other constraints. Feld then invested Haines's $2 million in Wrenfield's Growth 80 model portfolio, which holds 80% equities and 20% bonds.

Dorothy Quint, a retired client, has a written investment policy statement (IPS) that calls for a conservative, income-oriented portfolio. Quint called Feld and asked him to buy $20,000 of shares in a speculative mining company, about 1% of her portfolio. Feld told her the purchase was inconsistent with her IPS and explained the risks. Quint said she understood and still wanted the shares. Feld recorded the conversation in her file and placed the order.

Samuel Ortiz has been a client for five years. Two years ago Ortiz told Feld that he had sold his business and retired, so he would now need regular withdrawals from his portfolio to cover living costs. Feld has not met Ortiz or reviewed or updated his IPS since the account was opened, and Ortiz's portfolio remains invested for long-term growth with no provision for withdrawals.

To attract new clients, Feld prepared a brochure showing the one-, three- and five-year returns of the five accounts he manages that have performed best. The brochure describes these figures as "representative client results." Feld manages 140 accounts, and the five shown beat the median account by more than four percentage points a year.