Trevor Blevin, a CFA candidate and a former employee of Regal Bank (Regal), recently joined Spalding Asset Management as the head of compliance. He is shocked by todays front-page business news headline: Regal Depositors Left in the Cold: Central Bank Regulator Places Bank under Statutory Management. The article mentions the reason for Regals closure was the CEOs illegal behavior, including fraud, as well as money laundering associated with a major client. The discovery occurred one month after the death of Regals CEO, Mr. James Antonio. Up until three weeks ago, Blevin headed Regals internal audit department and knew nothing of any fraud or client money laundering, despite having recently supervised a major internal audit exercise.

Meanwhile, Blevin, still reeling from the Regal Bank saga, decides to take another look at Spaldings compliance policies and procedures to ensure they are fully in line with the CFA Institute Standards of Professional Conduct. While reviewing the firms anti-money-laundering policies, he notices lapses with respect to recently implemented laws, and he is afraid the firm may already be in violation. He plans to update the existing policies as soon as possible.

After concluding his review, Blevin recommends to Spaldings board of directors changes to the firms conflicts of interest policies. Blevin is concerned the staff may not be putting clients interests ahead of their own when trading for their personal accounts. He asks for the boards endorsement of revisions in the following two policies:

Policy 1: Staff are not allowed to participate in any private placements.

Policy 2: Any client accounts that include staff as beneficiaries must trade after all other client accounts.

Spaldings business development manager asks Blevin to make a presentation to a potential pension fund client, Mokar Staff Retirement Fund. The manager informs him that the firm previously managed the Mokar account but lost it. A Mokar trustee informs him that Spalding was fired because the trustees could not understand their monthly statements and could not tell how they performed relative to other pension accounts under Spaldings management. During the presentation, Blevin states, We are in the process of updating our compliance policies, including our minimum requirements for performance presentation reporting.

What action should Blevin most likely take regarding his discovery about Spaldings anti-money-laundering policies so as to comply with the CFA Institute Standards of Professional Conduct?