Patricia Loveday, CFA, is a portfolio manager of Raven Asset Management. Recently, she won a mandate from the Flemish Trust pension fund trustees to manage the investments of the fund. One of the Flemish Trust trustees privately mentions that Loveday should direct her trades to Churner Securities, which is owned by a relative of one of the trustees. Loveday, for fear of losing the account, directs 50% of the trades to Churner Securities. She is pleased to find that Churner's quality of execution is good and the quality of their emergingmarket research is excellent. Although Flemish Trust does not invest in emerging markets, Loveday finds the research useful for the other funds she manages. Loveday decides not to inform anyone regarding the situation. According to the Code and Standards:

a) Loveday should stop trading with Churner Securities.

b) Loveday may continue trading with Churner Securities.

c) Loveday should disclose this arrangement to Flemish Trust.