Question

Timothy a financial manager for individual clients, knows that a certain action one of his clients is considering would have a negative impact on some of his own personal business plan. Timothy's client is unaware of this. As he analyzes the situation, Timothy does believe that the clients potential actions would probably be best for the client. He doesn't want the client to decide on this course, however, because of the loss he would encounter personally. What type of situation is Timothy in?

A. Contradiction to duties
B. Conflict of interests
C. Misreporting
D .Financial fraud

Answer 1

Timothy is in B. Conflict of interest.

Step-by-step explanation

• Conflict of interest arises when an individual or personal interest clashes with one's professional interest. It is also a situation when two individuals have different stakes in a given situation. This difference of stakes or interest in a given situation gives rise to a conflict of interest.
• In the given situation conflict of interest rises since Timothy being a financial manager is aware that his client's action is going to impact Timothy's business plan but it is good as far as the client's interest is concerned.
• At the end he doesn't want his client to take that course of action because it is going to hamper and affect his interest. Therefore, there was a conflict of interest between the two.