Carter, a partner in a financial planning firm, solicited a client without reporting it to the firm. He used the letterhead, business cards, and facilities of the firm. He then defrauded the client out of $138,000 and left for Honduras. Will the firm be liable to this client?
A) No, since Carter was breaking his fiduciary duty to the other partners.
B) Yes, because the firm could then go after Carter and collect for its loss.
C) No, since this act to defraud is illegal and partners do not have to support illegal acts.
D) Yes, since all partners are responsible for "any wrongful act" of another partner.
E) Yes, since Carter was working without apparent authority.
Correct Answer:
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