SQE1 sample questions

Question 35

A solicitor has been instructed by a client company that is suffering cash flow difficulties. The solicitor has been instructed by the client to advise on its directors’ duties in respect of monitoring the company’s financial position. In the course of discussions, the client mentions that it is considering attempting to improve its financial position by investing in equity securities and asks whether the solicitor can recommend any stockbrokers.

The solicitor's brother is a partner in a firm of stockbrokers which is authorised by the Financial Conduct Authority and which has made substantial returns for the solicitor and other clients.

The solicitor has concluded that making the referral would:

(i) not in any way compromise his independence as the client’s legal advisor; and

(ii) be in the best interests of the client because the stockbrokers are the best available in this field.

The solicitor will not get a financial benefit from the referral. The solicitor knows that the brother would be grateful for the business introduction.

Which of the following steps should the solicitor take next?

A. Cease to act for the client.

B. Refer the client to an individual at the stockbrokers other than the solicitor's brother.

C. Get written confirmation from the brother that the solicitor will not get a financial benefit in return for the business referral.

D. Inform the client that the solicitor's brother is a partner of the stockbrokers.

E. Ask somebody else in the solicitor's firm to refer the client to the stockbrokers.