Monroe is a chartered CFA member. He was recently hired by Delorian Investments Inc., a company that manages individual portfolios, pension funds and mutual funds to manage personal portfolios. He is paid a base salary of $75,000, plus a percent (0.75%) of assets that he administers. Monroe is interested in building up his business quickly. He writes a letter to all his clients stating: "... should you refer any private client to me whose investable assets are greater than $500,000, I will compensate you by 0.125% on the fees that you pay to me for a period of one year." Monroe believes that this is a good way of building up his business and that his company will be pleased with his efforts. He does not discuss his plan with his employer, Delorian, prior to sending out the letter. (Total 6 marks)

a)Identify the Standard and the subsection of the CFA Standards that is being contravened by Monroe. (1 mark)

b)Explain why this type of activity is wrong in this case. (3 marks)

c)Explain what Management's responsibility is in this situation and indicate the CFA Standards that management is contravening. (2 marks)