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Lance Tuipulotu, CFA, manages investments for 400 individuals and families and often finds his resources stretched. When his largest investors petition him to include a 5% to 7% allocation of non-investment-grade bonds in their portfolios, he decides he needs additional help to meet the request. He considers various independent advisors to use as submanagers, but determines that the most qualified advisors would be too expensive. Reasoning that a lower-cost provider would enable him to pass the savings along to his clients, he chooses that provider to invest the new bond allocation. Tuipulotu has violated: A. Standard III(C) "Suitability" by failing to consider the appropriateness of the non-investment-grade bonds. B. Standard V(A) "Diligence and Reasonable Basis" by letting fee structure determine the selection of the submanager. C. Both Standard III(C) "Suitability" and Standard V(A) "Diligence and Reasonable Basis." |