Ethics conundrum

CFA Level III Ethics
#1

Richmond mentions that he has recently received an offer to serve as a board member for a manufacturing company he covers as an analyst. Richmond informs the committee that he will receive no compensation and that he will change his rating on the stock of the manufacturing company to Neutral from Buy to avoid any appearance of a conflict of interest.

“By joining the board, would Richmond be in violation of the Standards?
A. No
B. Yes, because he will have an inherent conflict of interest
C. Yes, because the stock of the manufacturing company may presently be held in clients’ portfolios”

Answer is B. Why isn’t it c?
(The problem with ethics q in cfa is they never explain why its not the other answers. Drives me nuts but it is what it is.)

#2

Logicaly “C” is a subset of “B”

But there is inherently a bigger conflict than “C” is that he cannot be imaprtial on the stock.

The main issue is he can’t have anything to do with being an analysts of the stock and be on the board.
He will be an insider and can’t give impartial advice to clients.
What if he thinks the stock is a sell, even from public data, is he going to publish?
Even by removing the buy he is not been fair to clients.
He needs to be free to give impartial advice on the stock.

1 Like
#3

@MikeyF - yep thanks I can see how C is a subset of B. Honestly, these questions feel random to me at this point. I will just do my best on them.