Which CFA Institute Standard governs the acceptance or payment of referral fees?

• A. Standard VI(C) Referral Fees
• B. Standard V(A) Diligence and Reasonable Basis
• C. Standard III(B) Fair Dealing
• D. Standard II(B) Market Manipulation

Answer: (A)

Referral fees create a potential conflict of interest that can influence professional judgment. The standard on Referral Fees directly addresses how such fees may be accepted or paid, aiming to prevent compensation arrangements from compromising independence, objectivity, or the duty to act in the client’s best interests. It underscores the need for transparency and proper handling of any referral arrangements.

Other standards cover different areas—due diligence and having a reasonable basis for recommendations, fair dealing in client interactions, and avoiding market manipulation—but they do not govern referral-fee arrangements, so they’re not the applicable rule for this issue.