Andre Shrub owns and operates Conduit, an investment advisory firm. Prior to opening Conduit, Shrub was an account manager with Elite Investment, a hedge fund managed by his good friend Adam Reed. To attract clients to the new Conduit fund, Shrub offers lower-than-normal management fees. He can do so because the Conduit fund consists of two top-performing hedge funds managed by his friend Reed. Given his personal friendship with Reed and the prior performance record of these two funds, Shrub believes this new Conduit fund is a winning combination for all parties. When new clients contact Shrub, he quickly encourages them to invest with Conduit to gain access to the Elite funds. No one is turned away because Shrub wants the Conduit fund to rapidly expand its assets under management.

Required:

Has Shrub acted appropriately in accordance with the CFA Institutes Code of Ethics and Standards of Professional Conduct? Justify your answer. If you believe that Shrub should have behaved differently, please ensure you describe what behaviour would have been acceptable.