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Beatnik

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tT
发表于 2013-3-31 12:41 | 只看该作者

Why not 'C' ? Can someone explain ? (Ethics)

reporting, suspected, activity, someone, another
Deloris Johnson, CFA, suspected that her intern, who was working without pay at her brokerage firm, had violated a federal securities regulation. Johnson discussed the matter with her company’s legal counsel who said that the intern’s conduct was illegal. According to the CFA Institute Code and Standards of Professional Conduct, Johnson can dissociate herself from this illegal activity by:
A) transferring supervision of the intern to another person.
B) reporting the activity to the appropriate authorities.
C) telling her intern to stop such conduct.
Your answer: C was incorrect. The correct answer was B) reporting the activity to the appropriate authorities.
Johnson can dissociate herself from the illegal activity by reporting the activity to the appropriate authorities. However, the Code and Standards do not require that she report legal violations to the appropriate governmental or regulatory organizations, but such disclose is prudent in this circumstance.
By transferring the intern to another supervisor this may not solve the problem of the illegal activity occurring and the company would still be held liable for it.
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genuinecfa

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发表于 2013-3-31 12:41 | 只看该作者
“By transferring the intern to another supervisor this may not solve the problem of the illegal activity occurring and the company would still be held liable for it.”
this is pretty much self-explanatory.

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ayaz_mahmud369

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发表于 2013-3-31 12:41 | 只看该作者
You can’t just verbally tell someone not to do something and consider that disassociation. I would think a better answer would be to fire her or take other steps to prevent her from doing whatever it is she’s doing wrong, which I guess B does even if its not a requirement.

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DSquaredSlim

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发表于 2013-3-31 12:41 | 只看该作者
I was confused between B and C, as B is not a requirement. But just went back read the guidance once again which states that
“The first step should be to attempt to stop the behaviour by bringing it to the attention of the employer through a supervisor or compliance department”
I think this implies not to get in touch directly. I hope I am not reading too much into it.

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jarobi04

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发表于 2013-3-31 12:42 | 只看该作者
I think the words ‘appropriate authorities’ sound ambiguous here. It could refer to the management or compliance dept. but not governmental or regulatory organizations.
I’m still confused which the question, shouldn’t the first action is to ask the intern to stop such conduct immediately and then report to the management or compliance?

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malbec

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发表于 2013-3-31 12:42 | 只看该作者
Actually when an employee or client is doing something illegal you are REQUIRED to report the activity to proper authorities (i.e. cops), however you aren’t required to report the conduct to regulatory agencies if I remember correctly.

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transferpricing

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7#
发表于 2013-3-31 12:42 | 只看该作者
Standard I(A) Knowledge of the Law:
“Although the Code and Standards do not require that members and candidates report violations to the appropriate governmental or regulatory organizations, such disclosure may be prudent in certain circumstances, and mandated if required by applicable law”

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