CFA 1 Ethics

Oni Erobo, CFA, the general partner in a real estate development project, is responsible for completing the project within an 18-month period and within budget. Erobo will receive an equity stake of 20% in the project if it is done within budget. Concerned that project costs could escalate, the limited partners require Erobo to cap expenses at 15% above budget. Costs were within expectation up until the last month of construction, when imported lighting fixture costs (accounting for roughly 5% of total costs) escalated by more than 50%. As a result, the overall return declined below the partners’ expected 35% return on investment. Erobo did not inform the limited partners about the increased costs. Did Erobo most likely violate the CFA Institute Code of Ethics and Standards of Professional Conduct?