Reading 2-I: Standards of Professional Conduct & Guida

36、Mary Kim, CFA, practices in the established country of Oldasia as well as in the emerging country of Newasia. By regulation, Oldasia prohibits licensed investment advisors from trading in securities ahead of their clients. Newasia has no laws or regulations in this area. Mary Kim may:

A)   trade ahead of her clients in Newasia only.

B)   trade simultaneously with her clients in Newasia only, as long as she has made full disclosure to her clients that she reserves the right to do this.

C)   not trade ahead of her clients in either country.

D)   trade ahead of her clients in Newasia only, as long as she has made full disclosure to her clients that she reserves the right to do this.

The correct answer was C)

Under Standard I(A), Mary Kim, as a CFA charterholder, must apply the CFA Institute Code and Standards or the controlling law, whichever is stricter. Because Standard VI(B) requires members to put client trades ahead of their own transactions, Mary Kim must follow the standard in the absence of governing law, or where the law is less strict than the standard.

37、Joan Platt, CFA, operates an investment advisory service in New York but maintains an office in Xania. Xania recently establish a stock market, which is not very efficient. None of the Xanian stocks trade in the U.S. market. Xania legally permits the use of material inside information. Platt believes that using inside information would help her compete against other Xanian investment advisors and also help some of her Xanian clients reach their investment objectives. Platt is considering adopting local investment practices in Xania. According to CFA Institute Standards of Professional Conduct, Platt may:

A)   use material inside information, but only after notifying CFA Institute.

B)   use material inside information because Xania legally permits this practice.

C)   use material inside information because CFA Institute Standards apply only to countries where the use of material inside information is illegal.

D)   not use material inside information.

The correct answer was D)     

Because applicable law involving material inside information is less strict than the Code and Standards, Platt must adhere to the Code and Standards. Standard II(A) prohibits against use of material nonpublic information.

38、Georgia Jones, CFA, is an analyst for Johnson, Thomas & Co. She also serves as an outside director for Dewey Manufacturing, Inc. In the course of her duties, she begins to believe that Dewey’s income statement for the most recent period may have been misstated. Georgia should do all of the following EXCEPT:

A)   consult with Johnson, Thomas' legal counsel.

B)   inform the Securities and Exchange Commission.

C)   refrain from voting to approve any of Dewey's financial statements that include the element in question.

D)   consult with Dewey Manufacturing's legal counsel.

The correct answer was B)

Jones must pursue her concerns about a possible misstatement, because, if material, it may be misleading to investors. Consistent with Standard I(A), Jones must not knowingly participate or assist in a regulatory violation. As long as her concerns exist, she must not validate any financial statements by voting to approve them. In addition she should seek competent legal counsel both at her own firm and at Dewey Manufacturing. She should not go to regulatory bodies until she has more certainty about the possible misstatement and has received counsel that she should proceed.

39、An analyst, who is a CFA charterholder, is working in a foreign country. Which of the following statements is TRUE? The analyst is:

A)   governed by CFA Institute's Code and Standards.

B)   governed by the laws and standards of the country in which he is living and working.

C)   covered by U.S. securities laws.

D)   covered by the strictest of the following laws and rules: his own country's, the foreign country's or CFA Institute's Code and Standards.

The correct answer was D)

The analyst is covered by the strictest of the following laws and rules: his own country’s, the foreign country’s or CFA Institute’s Code and Standards.

40、Benito Salvatore, CFA, is licensed in the established country of Oldworld but has clients and makes investments in the emerging county of Newworld. The regulations of Oldworld prohibit licensed investment professionals from taking gifts or gratuities in any amount from vendors or persons connected with potential investments. The laws of Newworld are silent on this issue. Unsolicited, Salvatore is offered a vase worth US $75 by a Newworld trust company and a bronze statue worth US $200 by a Newworld company that Salvatore is considering as a potential investment.

Salvatore is:

A)   not permitted to accept either gift.

B)   permitted to accept the vase but not the statue.

C)   permitted to accept the statue but not the vase.

D)   permitted to accept both gifts.

The correct answer was A)

Under Standard I(A), Salvatore must, as a CFA charterholder, apply the CFA Institute Code and Standards or the controlling law, whichever is stricter. In this instance the stricter laws of Oldworld, where Salvatore is licensed, apply to prohibit the gifts, even though the gifts are offered in Newworld.