US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) ia5248-loyalty: Eliminate conflicts or make full and fair disclosure so the client can give informed consent; never favour the adviser's or another client's interest

The duty of loyalty requires the adviser not to subordinate the client's interest to its own: every conflict of interest that might, knowingly or not, tilt its advice away from disinterest must be removed or fully and fairly disclosed, so that the client can give informed consent. Disclosure must be specific enough that the client understands the conflict and its effect; a statement that the adviser may have a conflict is inadequate where the conflict does exist, and disclosure that is so complex a reasonable client could not understand it is no disclosure at all. Consent may be implicit through the client proceeding after disclosure, but an adviser cannot infer consent where disclosure or the client's sophistication is insufficient. Allocation of investment opportunities among clients must be fair and disclosed, and the adviser may not favour one client over another for its own benefit.