What standards does a CFA Institute member violate when recommending investments while having a conflict of interest?

Recommending investments while experiencing a conflict of interest directly pertains to the standards established by the CFA Institute regarding how members should manage conflicts to uphold client trust and ethical conduct. The relevant standard emphasizes the need to either avoid conflicts of interest when possible or to disclose them fully, ensuring that clients are aware of any factors that may influence the recommendations being made.

When a member has a conflict of interest, failing to disclose it undermines the integrity of the advice given and can lead to a breach of fiduciary duty. This standard is fundamental as it helps protect clients' interests by ensuring they receive advice that is free from undue influence and aligned with their best interests. Following this standard is critical in maintaining the ethical standards of professionalism and trust within the financial services industry.

Though other standards like Diligence and Reasonable Basis or Fair Dealing may also play a role in investment recommendations, they do not directly address how to handle conflicts of interest, which is the focus of the question. Therefore, recognizing the importance of either avoiding or appropriately disclosing conflicts of interest is essential for ethical practice in a CFA member’s recommendations.