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标题: Ethical and Professional Standards 【Reading 2】Sample [打印本页]
作者: bapswarrior    时间: 2012-3-20 10:03     标题: [2012 L2] Ethical and Professional Standards 【Session 1 - Reading 2】Sample

Nicholas Brynne, CFA, is a fixed-income analyst who trades in mortgage-backed securities (MBS). The MBS industry has seen sweeping regulatory changes since Brynne took his current position, and he now feels his understanding of applicable laws and regulatory standards is dated. Brynne must:
A)
have all trades reviewed by his compliance department until he has obtained an expert level of knowledge in compliance.
B)
rely on his firm’s policies and procedures for guidance on legal and regulatory standards.
C)
update his understanding of applicable laws and regulatory standards relating to his position.


See Standard I(A) "Knowledge of the Law." Brynne should update his understanding of applicable laws and regulatory standards relating to his position, although he is not required to be an expert in compliance. Relying only on firm policies and procedures is not sufficient.
作者: bapswarrior    时间: 2012-3-20 10:04

Michael Bellow, CFA, CAIA, is an investment banker who is involved with an initial public offering (IPO) of NewCo. Because this is Bellow’s first involvement in an IPO, he reports to an experienced supervisor. While reviewing past financial statements provided by NewCo, Bellow suspects that NewCo deliberately overstated its earnings for the past several quarters. Bellow seeks the advice of his firm’s highly competent general counsel and follows the advice given without deviation. Based on the general counsel’s advice, Bellow consults his immediate supervisor about the suspected overstatement of earnings. After reviewing the situation, Bellow’s supervisor explains why NewCo’s calculations of its earnings are correct. Bellow realizes that his inexperience and exuberance initially led him to an incorrect conclusion about NewCo’s earnings.
Which of the following statements about Bellow’s actions involving Standard I(A), Knowledge of the law, and Standard I(C), Misrepresentation, is CORRECT? Bellow:
A)
did not violate either Standard I(A) or Standard I(C).
B)
violated both Standard I(A) and Standard I(C).
C)
violated Standard I(A) but did not violate Standard I(C).


Bellow did not violate Standard I(A), Knowledge of the law, because he sought advice of counsel and followed that advice. Bellow did not violate Standard I(C), Misrepresentation, because he made reasonable and diligent efforts to ensure the accuracy of the information and to avoid any material representation.
作者: bapswarrior    时间: 2012-3-20 10:05

Which of the following statements about the responsibilities of CFA charterholders is CORRECT? CFA charterholders:
A)
are only obligated to comply with securities laws in the U.S.
B)
need not comply with the laws and rules governing their profession or must not engage in any individual behavior that reflects adversely on the entire profession.
C)
must comply with the laws and rules governing their profession and must not engage in any individual behavior that reflects adversely on the entire profession.


CFA charterholders must comply with the laws and rules governing their profession and must not engage in any individual behavior that reflects adversely on the entire profession. While they should act honorably and follow U.S. securities laws, they are obligated to more than that, as set forth in the Code and Standards.
作者: bapswarrior    时间: 2012-3-20 10:06

According to the CFA Institute Standards of Professional Conduct, Standard I(A), Knowledge of the Law, members shall not knowingly participate or assist in any violations of laws, rules, or regulations. An analyst:
A)
is held responsible for participating in illegal acts when the law is evident to anyone knowing the law and is held responsible for violations by others when the analyst is unaware of the facts giving rise to the violation.
B)
must report all legal violations to the proper regulatory commission and is held responsible for participating in illegal acts when the law is evident to anyone knowing the law.
C)
is held responsible for participating in illegal acts when the law is evident to anyone knowing the law and can participate in a violation by having knowledge of the violation and taking no action to stop it or disassociate from it.


If you suspect someone is planning or engaging in illegal activities, you should:
作者: bapswarrior    时间: 2012-3-20 10:06

The SEC’s new stock-trading rule has just gone into effect. The SEC will give brokers a 10-day grace period, during which violators of the rule will be immediately notified and given a chance to remedy their situation to comply with the new rule. If a CFA Institute member unknowingly violates the rule and then remedies the situation within the 10-day grace period, has the member violated Standard I(A)?
A)
No, because the member remedied the situation.
B)
No, because the member unknowingly broke the rule.
C)
Yes, because the member did not maintain knowledge and know of the rule.


Standard I(A) explicitly says that a member shall maintain knowledge and comply with laws, rules, and regulations. By not knowing of the rule, the member broke the standard. If a CFA Institute member accidentally breaks a rule from a careless error and remedies the situation, this would not be a violation of Standard I(A).
作者: bapswarrior    时间: 2012-3-20 10:07

Lawrence Kelly is the Chief Investment Officer at a money management company that claims it is in compliance with CFA Institute Soft Dollar Standards. For the first time, the company has purchased securities in the country of Santa Rosa. He learns that under Santa Rosen law, one of the company's soft dollar policies is forbidden, yet to conform with the law, Lawrence would have to violate the Soft Dollar Standards, but not the Standards of Professional Conduct. Lawrence:
A)
must follow the Santa Rosen Law and cease claiming compliance with CFA Institute Soft Dollar Standards.
B)
should follow the Santa Rosen Law and can still claim compliance with CFA Institute Soft Dollar Standards.
C)
must follow the CFA Institute Soft Dollar Standards, informing the Santa Rosen regulators of his reasons.


In cases when the Soft Dollar Standards conflict with local law, managers should follow local law and are still in compliance with the Standards.
作者: bapswarrior    时间: 2012-3-20 10:08

Lawrence Kelly is the Chief Investment Officer at a money management company that claims it is in compliance with CFA Institute Soft Dollar Standards. For the first time, the company has purchased securities in the country of Santa Rosa. He learns that under Santa Rosen law, one of the company's soft dollar policies is forbidden, yet to conform with the law, Lawrence would have to violate the Soft Dollar Standards, but not the Standards of Professional Conduct. Lawrence:
A)
must follow the Santa Rosen Law and cease claiming compliance with CFA Institute Soft Dollar Standards.
B)
should follow the Santa Rosen Law and can still claim compliance with CFA Institute Soft Dollar Standards.
C)
must follow the CFA Institute Soft Dollar Standards, informing the Santa Rosen regulators of his reasons.


In cases when the Soft Dollar Standards conflict with local law, managers should follow local law and are still in compliance with the Standards.
作者: bapswarrior    时间: 2012-3-20 10:09

A member who suspects that a colleague is violating the law should most appropriately:
A)
consult with the company counsel to determine if in fact a law is being violated.
B)
report the illegal activity to the appropriate regulatory agency.
C)
report the illegal activity to CFA Institute Professional Conduct Program for action.


Standard I(A), Knowledge of the Law, applies in this situation. According to this Standard, members shall not knowingly participate or assist in, and must dissociate from, any violation of laws, rules, or regulations.
When members suspect a client or a colleague of planning or engaging in ongoing illegal activities, members should take the following actions:
Note:  The Code and Standards do not require that members report legal violations to the appropriate governmental or regulatory organizations, but such disclosure may be prudent in certain circumstances.
作者: bapswarrior    时间: 2012-3-20 10:10

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)
reporting the activity to the appropriate authorities.
B)
transferring supervision of the intern to another person.
C)
telling her intern to stop such conduct.

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.
作者: bapswarrior    时间: 2012-3-20 10:11

CFA Institute believes:
A)
that a minimum level of professional responsibility and conduct dictates that members be aware of and comply with laws, rules, and regulations governing their conduct.
B)
that a maximum level of professional responsibility and conduct dictates that members be aware of and comply with laws, rules, and regulations governing their conduct.
C)
that firms should comply with all domestic laws and regulations and that these laws also govern behavior in foreign markets, regardless of foreign laws and requirements.


CFA Institute’s Code and Standards dictate a minimum level of conduct. Standards should not be based on ethics of upper management and the board of directors of a company. Firms must comply with the strictest applicable standards, whether they be foreign or domestic laws and regulations.
作者: bapswarrior    时间: 2012-3-20 10:13

Joan Platt, CFA, operates an investment advisory service in New York but maintains an office in Xania. Xania recently established 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 because Xania legally permits this practice.
B)
use material inside information, but only after notifying CFA Institute.
C)
not use material inside information.


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.
作者: bapswarrior    时间: 2012-3-20 10:14

Which of the following statements about the CFA Institute Code and Standards is most accurate? The Code and Standards:
A)
do not require that members report legal violations to the appropriate governmental or regulatory organization.
B)
require members to persuade the perpetrator to cease illegal activities.
C)
prohibit members from accepting gifts that create a conflict with their employer's interest.


The Code and Standards do not require members to report violations to legal authorities, but such disclosure may be prudent or required in certain circumstances. They do not require members to quit their jobs or to persuade violators to cease illegal activities. They do require that members report the activities to the appropriate person(s) in their own firm and disassociate themselves from the illegal actions. Members must obtain written permission to accept gifts that create a conflict with their employer's interest.
作者: bapswarrior    时间: 2012-3-20 10:14

Robe Advisory Services operates an office in San Francisco, where it manages portfolios for its clients based in the United States. The firm also maintains an office in Tokyo, where it employs Sam Lee, CFA who researches Japanese stocks. According to the CFA Institute Standards of Professional Conduct, Lee is required to maintain knowledge of and comply with all applicable laws, rules, and regulations in:
A)
both the U.S. and Japan, but not the CFA Institute Standards of Professional Conduct.
B)
both the U.S. and Japan and the CFA Institute Standards of Professional Conduct.
C)
Japan, but not the U.S., and the CFA Institute Standards of Professional Conduct.


To abide by the Standards, employees who work for foreign-based firms are required to apply the stricter of the foreign (here, U.S.) law, the domestic (here, Japanese) law, or CFA Institute standards.
作者: bapswarrior    时间: 2012-3-20 10:15

Which of the following is a CORRECT statement of a member's duty under the Code and Standards?
A)
A member who trades securities in a country with less strict laws, rules, regulations, or customs may follow those laws if he discloses this information to his client.
B)
A member is required to comply only with applicable local laws, rules, regulations, or customs even though the CFA Institute code and Standards may impose a higher degree of responsibility or a higher duty on the member.
C)
In the absence of specific applicable law or other regulatory requirements, the Code and Standards govern the member's actions.


Members are always, at a minimum, subject to the Code and Standards.
作者: bapswarrior    时间: 2012-3-20 10:16

Mega Securities, a multinational investment advisor based in the United States, employs the following analysts who practice in multiple jurisdictions.
According to the CFA Institute Code and Standards, which of the following statements about Black and White is CORRECT?
Black must adhere to theWhite must adhere to the
A)
Code and Standardslaw of Country S
B)
law of Country Llaw of Country S
C)
law of Country Nlaw of Country L


Because the applicable law in Country L is less strict than the Code and Standards, Black must adhere to the Code and Standards. Because the applicable law is stricter than the Code and Standards, White must adhere to the more strict applicable law of Country S.
作者: RobertA    时间: 2012-3-20 10:28

If an analyst suspects a client or a colleague of planning or engaging in ongoing illegal activities, which of the statements about the actions that the analyst should take is most correct? According to the CFA Institute Standards of Professional Conduct, the analyst should:
A)
disassociate from any illegal or unethical activity if the member has reasonable grounds to believe that the activity is illegal or unethical.
B)
consult counsel to determine the legality of the activity and disassociate from any illegal or unethical activity if the member has reasonable grounds to believe that the activity is illegal or unethical.
C)
consult counsel to determine the legality of the activity.


According to the procedures for compliance involving Standard I(A), CFA Institute members should determine legality and disassociate from any illegal or unethical activity.
作者: RobertA    时间: 2012-3-20 10:28

The Standards of Professional Conduct explicitly outlines responsibilities to four groups. Which of the following is NOT a group mentioned in that list?
A)
The investing public.
B)
The Federal Reserve.
C)
The profession.


The Standards explicitly mention responsibilities to the profession, employers, clients, prospects, and the investing public. The Federal Reserve is not mentioned.
作者: RobertA    时间: 2012-3-20 10:29

Maria Valdes, CFA, is an analyst for Venture Investments in the country of Newamerica, which has laws prohibiting the acceptance of any gift from a vendor if the gift exceeds US $250. Valdes has evidence that her Venture Investments colleague, Ernesto Martinez, CFA, has been receiving gifts from vendors in excess of US $250.Valdes is obligated to:
A)
disassociate herself from the activity, and urge Venture to persuade Martinez to cease the activity.
B)
disassociate herself from the activity, urge Venture to persuade Martinez to cease the activity, and inform CFA Institute of the violation.
C)
disassociate herself from the activity, urge Venture to persuade Martinez to cease the activity, and inform CFA Institute and regulatory authorities of the violation.

Standard I(A), Knowledge of the Law requires members who have knowledge of colleagues engaging in illegal activities to disassociate from the activity and urge their firms to persuade the individual to cease such activity. Reporting to regulatory authorities may be prudent in certain circumstances, but is not required. Reporting to CFA Institute is not required.
作者: RobertA    时间: 2012-3-20 10:39

John Martin, an analyst, discovers that Jurix Co. has knowingly misstated information in its prospectus. To comply with CFA Institute’s Code of Ethics and Standards of Professional Conduct, Martin's most appropriate course of action is to:
A)
call the appropriate regulatory agency and report the action.
B)
resign from his job in order to disassociate from the potentially illegal activity.
C)
report the finding to the appropriate supervisory person in his firm.
To comply with the Code and Standards, John should notify the appropriate supervisory person in his firm of the violation.
作者: RobertA    时间: 2012-3-20 10:40

An analyst, who is a CFA charterholder, is working in a foreign country. Which of the following statements is CORRECT? The analyst is:
A)
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.
B)
governed by the laws and standards of the country in which he is living and working.
C)
governed by CFA Institute's Code and Standards.


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.
作者: RobertA    时间: 2012-3-20 10:42

Josh LeBlanc, a CFA charterholder, is an investment analyst for a small stock brokerage firm. He wants to acquire and maintain knowledge about applicable laws, rules, and regulations relating to his professional activities. According to the CFA Institute Standards of Professional Conduct, which of the following ways is least likely to meet compliance procedures?
A)
Rely on past practices followed within his firm.
B)
Review written compliance procedures on a regular basis.
C)
Keep informed about changes in applicable laws, rules, and regulations.


LeBlanc should follow the compliance procedures under Standard IA -- Knowledge of the law. Relying on his firm’s past practices may be insufficient for LeBlanc to stay current with changes in applicable laws, rules, and regulations.
作者: RobertA    时间: 2012-3-20 10:43

Janet Green, CFA, provides investment advice and other services to clients in several countries. She resides in Country A whose securities laws and regulations are less strict than the Code and Standards. She also conducts business with clients in Country B, which has no securities laws or regulations, and in Country C, which has securities laws and regulations that are stricter than the Code and Standards. Which of the following statements is CORRECT? According to CFA Institute Standards of Professional Conduct, Green must adhere to the Code and Standards in:
A)
Country A, Country B, and Country C.
B)
Country A but the law in Country B and Country C.
C)
Country A and Country B but the law in Country C.


Green needs to follow Standard I(A) -- Knowledge of the law. In Country A, Green must adhere to the Code and Standards because Country A’s laws are less strict. In Country B, Green must also adheres to the Code and Standards because Country B has no securities laws. Because Country C’s applicable law is stricter than the requirements of the Code and Standards, Green must adhere to the laws of Country C.
作者: RobertA    时间: 2012-3-20 10:48

Sometimes a CFA Institute member simply feels a law has been violated by his firm, and sometimes the member knows a law has been violated. Which of the following pairs of guidelines is CORRECT with respect to the first step a member should take in each case? The member should first contact:
A)
the firm's counsel if he feels a law has been violated and the SEC if he knows a law has been violated.
B)
his supervisor in the firm if he feels a law has been violated and contact the firm's counsel if he knows a law has been violated.
C)
the firm's counsel if he feels a law has been violated and contact his supervisor if he knows a law has been violated.


Standard I(A) says that when a member feels a law has been broken, the member should seek advice from the firm’s counsel. If the member feels the advice is unbiased and competent, the member should follow it. If the member knows a law has been violated, the member should contact a supervisor.
作者: RobertA    时间: 2012-3-20 10:49

Jason Blackwell, CFA, works as an investment manager for Mega Capital, a large multinational brokerage firm. He resides in a country whose applicable law is stricter than the Code and Standards but does business with clients in a country whose applicable law is less strict than the Code and Standards. Blackwell decides to follow the Code and Standards for clients in the less strict country. While Blackwell is still employed at Mega, Lego Associates verbally asks Blackwell to review client portfolios during evenings and weekends for a fee. Blackwell gets written consent from his immediate supervisor at Mega to undertake this independent activity for a one-month trial basis.Which of the following statements about Blackwell’s actions involving Standard I, Professionalism, and Standard IV(A), Loyalty is most accurate? Blackwell:
A)
violated both Standard I and Standard IV(A).
B)
did not violate either Standard I or Standard IV(A).
C)
violated Standard I but did not violate Standard IV(A).


Blackwell violated Standard I, Professionalism. Because the applicable laws in his resident county were stricter than the Code and Standards, he must adhere to the more strict applicable law.
作者: RobertA    时间: 2012-3-20 10:49

Bob Smith, CFA, is an outside board member of Atlantic Technologies, but is not paid by the firm for his services. An employee at Atlantic informs Smith that Atlantic has improperly timed the booking of contracts to achieve the desired quarterly financial results. The misleading financial statements would turn losses into profits. Smith confers with the firm's legal counsel who indicates that this conduct is, in fact, illegal. Smith urges Sharon White, Atlantic's chief operating executive, to change the financial statements, but she refuses to do so. According to CFA Institute Standards of Professional Conduct, which of the following statements best describes what Smith should do in this situation?
A)
Smith should immediately make CFA Institute aware of the situation at Atlantic.
B)
Smith should promptly disassociate himself from Atlantic's actions by resigning as a director or by reporting the activities to the appropriate authorities.
C)
Smith should wait until the next board meeting, which is scheduled in two weeks, to make other board members aware of the situation.


Smith should disassociate from any illegal activity by resigning as a director or by reporting the activities to appropriate authorities. Inaction combined with continuing association with Atlantic's illegal conduct may be construed as participation, or assistance, in the illegal conduct.
作者: RobertA    时间: 2012-3-20 10:50

A CFA Institute member is also a member and the portfolio manager of an environmentalist group. In its charter, the environmentalist group lists a group of companies its members should boycott. The CFA Institute member would violate Standard I(A) concerning obeying all rules and regulations if the member:
A)
purchases stock of a boycotted firm for the group's portfolio.
B)
performs either of the activities listed here.
C)
actively protests against a publicly traded firm boycotted by the group.


Standard I(A) says the member must be guided by all applicable rules and regulations of professional associations governing the member’s professional activities. Purchasing the stock for the firm would be a violation because it involves the member’s professional activities and the rules of a group to which the member belongs and works for. Actively protesting would not be covered by that standard.
作者: RobertA    时间: 2012-3-20 10:50

For an employee with the CFA designation who works for a firm, which of the following is NOT necessary to meet the requirements of the Code and Standards?
A)
It is recommended that their employer is aware of the Code and Standards.
B)
Recommend notifying their employer of their responsibility to follow the Code and Standards.
C)
Deliver a copy of the Code and Standards to their employer.


It is no longer required but recommended that CFA members and candidates notify their employer that they are required to follow the Code and Standards.
作者: RobertA    时间: 2012-3-20 10:52

A government committee has concluded that investment company fees should be disclosed to clients each quarter and has proposed new legislation to require this. Currently, the legal requirement is to report such data annually. In compliance with current legal requirements, Dolphin Investments discloses its fees annually. Eugene Shin, CFA, Dolphin's compliance officer, learns of the proposed changes but does not convert Dolphin's reporting to a quarterly basis. Shin's decision not to act:
A)
constitutes professional misconduct as defined in the Code and Standards.
B)
is not a violation of the Code and Standards.
C)
is a violation of his duty to employer as defined in the Code and Standards.


The potential change in the law is only a proposal at this stage. There is no violation as long as Dolphin is following the regulations currently in force.
作者: RobertA    时间: 2012-3-20 10:52

Allen Parsons, a CFA candidate, suspects a colleague at his firm of engaging in an illegal activity. Which of the following statements about procedures for compliance involving Standard I(A), Knowledge of the law is NOT correct? Parsons:
A)
is required to report this legal violation to the appropriate governmental or regulatory organizations.
B)
should urge his firm to attempt to persuade the perpetrator to cease such conduct.
C)
should consult counsel to determine whether the conduct is, in fact, illegal.


Standard I(A), Knowledge of the law, does not require that Parsons report legal violations to the appropriate governmental or regulatory organizations, but such disclosures may be appropriate under certain circumstances.
作者: RobertA    时间: 2012-3-20 10:53

Mary Kim practices in the economically advanced country of Oldasia as well as in the emerging market 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. According to the CFA Institute Standards of Professional Conduct, Kim may:
A)
not trade ahead of her clients in either country.
B)
trade ahead of her clients in Newasia only.
C)
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.


Under Standard I(A) Knowledge of the Law must apply the CFA Institute Code and Standards or the controlling law, whichever is stricter. Because Standard VI(B) Priority of Transactions requires members to put client trades ahead of their own transactions, Kim must follow the standard in the absence of governing law or where the law is less strict than the Standard.
作者: RobertA    时间: 2012-3-20 10:53

The CFA Institute Standards of Practice Handbook requires CFA Institute members to do all the following EXCEPT:
A)
to disclose in writing to the proper regulatory authority all observed violations of the securities laws and regulations.
B)
receive written permission from both their employer and outside clients to engage in investment consulting outside the firm.
C)
to inform employer, clients, and potential clients of benefits received for recommending products or services.


Members are not required to report violations of others to regulatory authorities, either verbally or in writing, but such reporting may be prudent.
作者: RobertA    时间: 2012-3-20 10:54

A CFA Institute member works for Secure Securities, Inc., and plays rugby on the firm’s rugby team. Secure Securities’ team recently played the team of a rival firm. During the game, a fight broke out and the CFA Institute member was the instigator, but no one was seriously hurt. Is this a violation of I(A) concerning maintaining knowledge and complying with laws, rules, and regulations?
A)
No, because a fight at a rugby game is not a professional activity.
B)
Yes, because the member is bound by the Code of Ethics.
C)
Yes, because the member could have hurt someone in the fight.


Standard I(A) covers members' professional activity only. Violations outside professional activity that involve fraud, theft or deceit would potentially be violations.
作者: RobertA    时间: 2012-3-20 10:54

CFA Institute members should encourage their employers to do all of the following EXCEPT:
A)
make clear that dishonest personal behavior reflects poorly on the profession.
B)
require employees to write personal ethics statements.
C)
conduct background checks on potential employees to ensure that they are of good character and eligible to work in the investment industry.


There is no reason to have employees write personal ethics statements. CFA Institute encourages all of the other actions.
作者: invic    时间: 2012-3-20 11:32

Jane Dawson, CFA, an analyst at a New York brokerage firm, suspects that Bob Boatman, CFA, another analyst at the same firm, has violated a state securities law. According to the CFA Institute Standards of Professional Conduct, Dawson is:
A)
required to report the suspected violation to CFA Institute.
B)
required to report the suspected violation to the appropriate state regulatory agency.
C)
NOT required to report the violation to the appropriate governmental or regulatory organizations.


The Code and Standards do not require that members report legal violations to the appropriate governmental or regulatory organizations, but such disclosure may be prudent in certain circumstances. Dawson should consult legal counsel and disassociate from the activity.
作者: invic    时间: 2012-3-20 13:09

Mary White, CFA, sits on the board of directors of XYZ Manufacturing, Inc. She discovers that management has knowingly participated in an activity she knows is illegal. According to the CFA Institute Standards of Professional Conduct, White is required to:
A)
disassociate herself from the activity.
B)
seek legal advice to determine what actions should be taken.
C)
both of these choices are correct.


Standard I(A), Knowledge of the Law. Prohibition against knowingly practicing or assisting in violation of laws, rules, and regulations. If White knows that someone has engaged in a possible illegal activity, she should: (1) report the finding to the appropriate supervisory person at her firm, (2) if the situation is not remedied, disassociate herself from the situation, and (3) seek legal advice to see what other actions, such as notifying the proper regulatory agency, should be taken.
作者: invic    时间: 2012-3-20 13:09

What is the rule of thumb for members, CFA charterholders and candidates in the CFA program when weighing the requirements of the CFA Institute Code and Standards and the requirements of local laws? If the applicable laws are:
A)
more strict, they must adhere to the applicable laws.
B)
less strict, they should make a judgment call on which to follow, the Code and Standards or the local laws and requirements.
C)
more strict, they must still follow the Code and Standards.


The rule of thumb for members, CFA charterholders and candidates in the CFA program requires that they adhere to the applicable laws if the applicable laws are more strict than the requirements of the Code and Standards. If there are no laws or the laws are less strict, they must adhere to the Code and Standards.
作者: invic    时间: 2012-3-20 13:10

Benito Salvatore, CFA, is licensed in the established country of Oldworld but has clients and makes investments in the emerging country 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 both gifts.
C)
permitted to accept the vase but not the statue.


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.
作者: invic    时间: 2012-3-20 13:11

Don Roberts, a CFA Institute member, resides in Country L, where the securities laws and regulations are less strict than the CFA Institute Code and Standards. Roberts also does business in Country N, which has no securities laws or regulations. Thus, Country N has no laws prohibiting the use of material nonpublic information. Roberts has clients in both Country L and N. Country L's law states that the law of the locality where business is conducted governs. According to CFA Institute Standards of Professional Conduct about the use of material nonpublic information, Roberts may:
A)
take investment action based on this information for clients in both Country N and Country L and for himself.
B)
not take investment action on the basis of this information.
C)
take investment action based on this information only for his clients in Country N but not for his clients in Country L or himself.


Because applicable law states that the law of the locality where the business is conducted governs and local law is less strict than the Code and Standards, the member must adhere to the Code and Standards. Standard II(A) prohibits the use of material nonpublic information.
作者: invic    时间: 2012-3-20 13:11

An analyst who is a CFA Institute member receives an invitation from a business associate’s firm to spend the weekend in a high-quality resort. In order to abide by the Standards, the analyst should (may):
A)
refuse the invitation if the associate is from a firm he analyzes for his employer.
B)
do both of the actions listed here.
C)
obtain written consent from his supervisor if the offer is contingent on achieving a target investment return.


According to Standard I(B) Independence and Objectivity, the analyst should refuse the invitation if it is from a firm the analyst covers for his employer. The analyst can accept the invitation if it is from a client but the analyst must get written consent from his employer if the offer is contingent on future performance, to comply with Standard IV(B) Additional Compensation Arrangements.
作者: invic    时间: 2012-3-20 13:12

An analyst has been writing research reports on a company for many years. As part of the analyst’s continuing research efforts, the analyst allows the firm to fly him to the firm’s headquarters and put him up in the guest quarters the company has for all corporate visitors. According to Standard I(B), Independence and Objectivity, this is:
A)
a violation no matter what the circumstances.
B)
a violation if the headquarters are within reasonable driving distance from the analyst's home.
C)
not a violation under any circumstances.


If such a trip is “out-of-the-way,” payment by the company for the trip is acceptable. If the headquarters are within reasonable driving distance, the analyst should drive there.
作者: invic    时间: 2012-3-20 13:12

Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. He places trades for the fund with River City Brokerage. River City presents Calaveccio with a bottle of inexpensive wine at Christmas each year. Calaveccio does not disclose this fact in the prospectus of the small cap venture fund. This action is:
A)
in violation of the Standard concerning disclosure of additional compensation arrangements.
B)
not in violation of the Code and Standards.
C)
in violation of the Standard concerning disclosure of conflicts to clients and prospects.


Under Standard I(B) Independence and Objectivity, members are advised to "use reasonable care" in order to maintain independence. While it is clearly understood that gifts from various entities have the potential to affect a member's independence and objectivity, a member can accept token gifts as long as they are not intended to influence or reward.
作者: invic    时间: 2012-3-20 13:13

Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. He places trades for the fund with Worldwide Brokerage. Worldwide is holding a conference in Amsterdam and has offered to pay for Calaveccio's airfare, meals, and accommodations associated with his attendance of the conference. The conference concerns European small cap securities and the EASDAQ. He decides that he will accept their offer and attend the conference. In order to comply with the Code and Standards, he:
A)
should not attend unless he pays for the trip himself.
B)
may attend, but he must disclose the arrangement to TrustCo's clients and prospects as required under Standard IV.B.
C)
may attend, but he must disclose the arrangement to his employer as a gift.


Under Standard I(B) gifts, benefits, compensation, or consideration cannot be accepted if the purpose was to influence or reward. Token items are OK. Worldwide Brokerage is not a client of Calaveccio but an entity that he does business with. As such Worldwide could influence Calaveccio to always do business with them which could be to the detriment of his fund if the execution of their trades starts to deteriorate compared to their competitors.
作者: invic    时间: 2012-3-20 13:13

An analyst is told by his supervisor that when he feels he should write a buy recommendation he is free to do so, and when he feels he should write a sell recommendation he should check with the supervisor first. This practice is:
A)
congruent with Standard V(A), Diligence and Reasonable Basis.
B)
in violation of Standard I(B), Independence and Objectivity.
C)
in violation of Standard V(A), Diligence and Reasonable Basis.


The policy dictated by the supervisor would infringe upon the analyst’s independence and objectivity . It would probably discourage the analyst from making sell recommendations and, furthermore, present the opportunity for the supervisor to try and change the analyst’s mind.
作者: invic    时间: 2012-3-20 13:14

According to CFA Institute Standards of Professional Conduct, which of the following is least likely a compliance procedure for maintaining independence and objectivity in making investment recommendations or taking investment action?
A)
Create a restricted list so that the firm disseminates only factual information about a controversial company.
B)
Maintain files to support investment recommendations.
C)
Restrict special cost arrangements related to travel.



Maintaining files to support investment recommendations is not a compliance procedure for Standard I(B): Independence and Objectivity, but it is a compliance procedure for Standard V(C): Record Retention.
作者: invic    时间: 2012-3-20 13:14

All of the following would be permitted according to the CFA Institute Standards of Professional Conduct EXCEPT:
A)
token gifts received from clients.
B)
air transportation paid by a corporate issuer for travel to a major metropolitan airport.
C)
use of an issuer’s corporate aircraft when commercial transportation is not available.


In order to maintain independence and objectivity, members and candidates should restrict special reimbursement arrangements concerning commercial transportation and hotel charges. Use of corporate aircraft is permitted when commercial transportation is not available.
作者: invic    时间: 2012-3-20 13:15

Susan Nielsen, CFA, is an equity research analyst on a fact-finding property tour with 6 other analysts to learn about Just Kittens, Inc. Just Kittens sells tungsten ball-bearings and has 16 warehouses, and 20 manufacturing, research, and wholesale sales outlets scattered over 8 countries – mostly emerging markets. Because of the remote location of some of the facilities, commercial travel is effectively unavailable. Just Kittens charters a jet and various busses to take the research analysts to the properties. If Nielsen accepts these accommodations, she is most likely:
A)
in violation of Standard I(B) "Independence and Objectivity."
B)
not in violation of Standard I(B) "Independence and Objectivity" because best practices dictate that better access to company executives is likely to lead to more accurate and timely information.
C)
not in violation of Standard I(B) "Independence and Objectivity" because commercial travel is effectively unavailable.


Nielsen is not in violation of Standard I(B) "Independence and Objectivity" because commercial travel is effectively unavailable.
作者: invic    时间: 2012-3-20 13:16

Francisco Perez, CFA, CPA, is a portfolio manager for an investment advisory firm. Due to the prominence of his position, he is often invited to attend free marketing and educational events hosted by firms which seek to inform the investment community about their investment processes. One such firm, Unlimited Horizons, has invited Perez to attend free educational events which qualify for Continuing Education credits which could help Perez maintain his CPA designation. Perez should most likely:
A)
decline to attend the event as it could result in a violation of Standard I(B) "Independence and Objectivity."
B)
accept the invitation as no cash compensation is involved and the primary intent is to educate and inform the investment community.
C)
decline to attend the event as it could result in a violation of Standard I(A) "Knowledge of the Law."


Perez should decline the invitation as it creates the impression of lack of independence. If he does not accept the free continuing education courses, he would have to pay for them some other way so the free courses are a form of compensation. Nothing in the vignette suggests the free classes are illegal.
作者: invic    时间: 2012-3-20 13:16

A money manager works for a full-service brokerage firm. After meeting with a new client and gathering all relevant information, the money manager says that she thinks her firm can perform all the financial services the new client needs. With respect to Standard I(C), Misrepresentation, this:
A)
may not be a violation if the manager's opinion is based upon the factual information gathered.
B)
may not be a violation if the representation was made orally.
C)
is a violation because she cannot make statements like this under any circumstances.


There is no violation if the opinion is based upon the factual information gathered and the firm’s actual capabilities. This is true whether or not the representation was written, oral, or electronic. None of the other choices are correct.
作者: invic    时间: 2012-3-20 13:17

According to CFA Institute Standards of Professional Conduct, which of the following statements about the prohibition against plagiarism is most correct? The prohibition against plagiarism applies to written materials:
A)
oral communications, and telecommunications.
B)
only.
C)
and oral communications only.


The prohibition against plagiarism applies to all three areas.
作者: invic    时间: 2012-3-20 13:17

According to CFA Institute Standards of Professional Conduct, which of the following is NOT a form of plagiarism?
A)
Citing specific quotations supposedly attributable to "leading analysts" and "investment experts" without specific reference.
B)
Presenting statistical estimates of forecasts prepared by others with the source identified, but without qualifying statements or caveats that may have been used.
C)
Using factual information published by recognized financial and statistical reporting services or similar sources without an acknowledgment.


Standard I(C) provides that "factual information published by recognized financial and statistical reporting services or similar sources" may be used without an acknowledgment.
作者: invic    时间: 2012-3-20 13:18

Steve Barton, CFA, used to work for Advisors, Inc. After he left Advisors, Barton developed a new screening methodology for determining which stocks to include in a portfolio. Barton is on friendly terms with his former colleagues at Advisors and shares his screening methodology with them. If Advisors uses the screening methodology without notifying Barton, then:
A)
Advisors must assume the responsibility of any client losses.
B)
Advisors has violated Standard I(C), Misrepresentation.
C)
Barton must assume the responsibility of any client losses.


According to Standard I(C), if an analyst or firm uses the work of others, they must seek authorization from the creators. Such work includes algorithms, such as a stock screening methodology.
作者: invic    时间: 2012-3-20 13:20

Marc Randall, CFA, is an investment analyst. During a meeting with a potential client, Randall's boss states that, "You can be sure our investments will always outperform Treasury Bonds because of our fine research staff members, like Marc." Randall knows that this statement is:
A)
a violation of fiduciary duties owed to clients under the Standards.
B)
not in violation of the Code and Standards.
C)
a violation of the Standard concerning prohibition against misrepresentation.


Under Standard I(C), members are forbidden from guaranteeing a specific rate of return on volatile investments. Therefore, the statement is in violation of the Standard.
作者: invic    时间: 2012-3-20 13:21

A copyrighted technique for measuring the downside risk of an investment has just been revealed to the public. If an analyst adopts the technique, he must cite the use of the technique in all research reports in which the technique is used EXCEPT:
A)
Neither of these answers provide grounds for an exception.
B)
if the analyst does not modify the technique at all.
C)
if the analyst uses reasonable care and verifies that the technique provides superior results.


Neither of the answers in this question provide adequate grounds for not citing the source of the methodology. Although “verifying” the technique is a good idea and congruent with the Code and Standards, the analyst still needs to cite the use of the copyrighted technique even after modifying it slightly to avoid violation of Standard I(C), Misrepresentation.
作者: invic    时间: 2012-3-20 13:21

A CFA charterholder gathers the closing prices of a security from a widely read publication. The charterholder uses the data as part of a report she is preparing and fails to report the data source in the report. This is:
A)
not a violation of Standard I(C) if the data can be gathered from several public sources.
B)
a violation of Standard I(C).
C)
not a violation of Standard I(C) if the data cannot be gathered from several public sources.


Since the security prices represent factual information that can be verified from several sources, there is no violation. It could have been a violation had the information been exclusively published by the source.
作者: kmf229    时间: 2012-3-20 13:28

At the time of its initial public offering (IPO), a mutual fund is invested primarily in junk bonds. As part of its strategy, it is also invested in some zero-coupon U.S. Treasury bonds. The amount of the investment in the Treasury bonds is such that their maturity value equals 90% of the current value of the fund. Which of the following may a CFA Institute member say to her clients concerning the fund at issuance?
A)
A CFA Institute member may not make either of these statements.
B)
Since the fund is backed by the U.S. government, you know you will get your money back.
C)
The fund is virtually default risk free.


Standard I(C), Misrepresentation, prohibits making statements that mention a guarantee of returns or misrepresent the true nature of the investment.
作者: kmf229    时间: 2012-3-20 13:29

Wes Smith, CFA, has been working toward the completion of a Master of Science in Finance. He has passed all the necessary courses and written the necessary thesis. He still must defend the thesis in one month. Smith’s thesis advisor assures him that he will pass the thesis defense. Smith has new business cards printed with “M.S. in Finance” after his name. This is a violation of:
A)
Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program.
B)
Standard I(C), Misrepresentation.
C)
none of the Standards if Smith does not make the cards public until after he defends his thesis and receives his degree.


If the cards were distributed today he would be in violation of Standard I(C), Misrepresentation. However, if Smith does not make the cards public until after he receives the degree, there is no violation.
作者: kmf229    时间: 2012-3-20 13:29

The following information involves two research analysts at a brokerage firm.
According to CFA Institute Standards of Professional Conduct involving prohibition against plagiarism, which of the following statements is CORRECT?
A)
Both Bagenot and Wain violated the Standards.
B)
Bagenot violated the Standards, but Wain did not.
C)
Wain violated the Standards, but Bagenot did not.


Bagenot complied with Standard I(C), which permits publishing factual information from Standard & Poor's without acknowledgment and using excerpts with acknowledgment. Wain committed plagiarism because she failed to give specific references for the quotations that she used.
作者: kmf229    时间: 2012-3-20 13:30

All of the following violate Standard I(C), Misrepresentation, EXCEPT:
A)
copying a proprietary computerized spreadsheet without seeking authorization from the creators.
B)
presenting factual information published by recognized statistical reporting services without acknowledgment.
C)
citing quotes attributable to "investment experts" without specific references.


Standard I(C), Misrepresentation, permits using recognized sources of factual information such as Standard & Poor’s Corporation and Moody’s Investors Service without acknowledgment.
作者: kmf229    时间: 2012-3-20 13:30

An analyst preparing a report needs to cite which of the following?
A)
A recent quote from the Federal Reserve Chairman.
B)
Estimates of betas provided by Standard & Poor's.
C)
The individual who developed a chart from the same firm.


Statistics provided by a recognized agency, such as Standard and Poor’s, do not need to be cited. Charts, quotes, and algorithms developed by the firm would need to be cited when they are used but the individual(s) who developed the materials within the firm do not need to be cited.
作者: kmf229    时间: 2012-3-20 13:31

Which of the following is NOT a form of plagiarism?
A)
Presenting statistical forecasts by others with the sources identified but without the qualifying statements that may have been used by the originator.
B)
Using factual information published by a recognized financial statistics reporting service without acknowledgment.
C)
Citing quotations said to be attributable to "leading analysts" or "investment experts" without specific reference.


Members may not generally use material without acknowledging the original source, but an exception is made for factual information published by recognized financial and statistical reporting services.
作者: kmf229    时间: 2012-3-20 13:32

Sandra Bulow, CFA, is responsible for updating her employing firm’s website to include changes in analysis techniques and trading procedures. She is often very delinquent in making these changes, despite working extensive hours. She is aware clients are using the website to make investment decisions, and has received complaints from the sales department as the information on the website if often different from what is presented in sales meetings. Bulow is most likely:
A)
in violation of Standard III(B) "Fair Dealing."
B)
not in violation of any Standard.
C)
in violation of Standard I(C) "Misrepresentation."


Bulow is most likely in violation of Standard I(C) "Misrepresentation." The web site information is erroneous, and needs to be updated to match the firm’s current practices.
作者: kmf229    时间: 2012-3-20 13:32

Timothy Hooper, CFA, is a security analyst at an investment firm. In his spare time, Hooper serves as a volunteer for City Pride, which collects clothes for the homeless. Hooper has occasionally given some of the clothes to his friends or sold the clothes instead of returning all of the clothing to City Pride. City Pride discovers what he has been doing and dismisses him. Later, City Pride learns that other volunteer organizations have dismissed Hooper for similar actions. Has Hooper violated Standard I(D) on professional misconduct in the CFA Institute Standards of Professional Conduct?
A)
Yes.
B)
No, because Hooper's conduct is unrelated to his professional activities as a security analyst.
C)
No, because Hooper volunteers his services to City Pride.


Hooper violated Standard I(D) because he repeatedly engaged in conduct that involves dishonest conduct. This violation occurred despite the fact that his offenses do not relate directly to his professional activities. However, Hooper’s conduct reflects poorly on his professional reputation and integrity.
作者: kmf229    时间: 2012-3-20 13:33

A CFA charterholder who comes to work intoxicated is:
A)
in violation of Standard I(D) concerning professional misconduct.
B)
in violation of Standard IV(A) concerning duties to employer.
C)
not in violation of the standards.


Being intoxicated at work is poor personal behavior. It is a violation of Standard I(D), which covers professional competence and integrity.
作者: kmf229    时间: 2012-3-20 13:33

All of the following are violations of Standard I(D), Misconduct, EXCEPT:
A)
conviction of a misdemeanor involving civil disobedience in support of one’s personal beliefs.
B)
conviction of a crime involving fraud.
C)
any conduct that undermines confidence that the CFA charter represents a level of achievement based on merit and ethical conduct.


The Code and Standards do not focus on personal conduct as long as the conduct does not reflect poorly on one’s professional reputation, integrity, or competence.
作者: kmf229    时间: 2012-3-20 13:34

A CFA charterholder is caught shoplifting and is sentenced to nine months in prison. Is this a violation of Standard I(D) Misconduct?
A)
Yes, because the crime involved stealing.
B)
Yes, because the prison sentence is more than six months.
C)
No, because the crime does not relate to the investment profession.


Any act involving lying, cheating, stealing, or other dishonest conduct that reflects adversely on the charterholder’s professional activities is a violation of Standard I(D). Although the crime did not relate to the investment profession, it certainly reflected adversely on the charterholder professionally.
作者: kmf229    时间: 2012-3-20 13:34

An analyst belongs to a nationally recognized charitable organization, which requires dues for membership. The analyst has worked out a deal under which he provides money management advice in lieu of paying dues. While performing services for the organization, the analyst discovers some useful computer programs that his predecessor developed and left as the property of the organization. The analyst decides to use the computer programs in his consulting business. This action is:
A)
a violation of Standard I(D) concerning misconduct.
B)
appropriate since the analyst is technically an employee of the organization.
C)
a violation of Standard III(B) concerning fair dealing.


Since the programs are the property of the organization, the analyst can only use them for the organization. It does not matter whether the analyst is an employee or not. Personal use of the
作者: kmf229    时间: 2012-3-20 13:35

Which of the following does NOT violate Standard I(D), Misconduct? Roland Lawson, a financial analyst:
A)
committed perjury in connection with a lawsuit against his firm.
B)
drinks excessively during business meetings with clients and returns to work under the influence of alcohol.
C)
is arrested for participating in a nonviolent protest.


Any professional conduct that involves dishonesty, fraud, or deceit is a violation of Standard I(D), Misconduct. One must refrain from activities that reflect poorly on integrity, reputation, trustworthiness, or professional conduct. The focus of the Standard is on professional, not personal, conduct.
作者: kmf229    时间: 2012-3-20 13:35

Nancy Hall, a candidate in the CFA program, is an analyst for a mutual fund. As part of her job she makes company visits to interview executives. On a recent trip she stayed with her sister instead of at a hotel. In her expenses Hall included a hotel charge of $100, which was less than the amount allowed by her employer. After receiving a check for her expenses, Hall disclosed to her supervisor that she had stayed with her sister instead of at a hotel. She also returned the $100 to her employer. According to CFA Institute Standards of Professional Conduct, which of the following statements best describes Hall's professional conduct?
A)
Hall did not engage in professional misconduct because she eventually disclosed this information and returned the $100 to her employer.
B)
Hall did not engage in professional misconduct because she did not meet all of the requirements to use the CFA designation.
C)
Hall engaged in professional misconduct.


Hall engaged in professional misconduct because her act involved dishonesty, fraud, and deceit.
作者: kmf229    时间: 2012-3-20 13:36

Hillary Jones, CFA, sometimes promises clients that she will allocate more shares from oversubscribed initial public offerings (IPOs) than she knows she will actually be able to deliver. Her employer has reprimanded her in the past for similar behavior. Which of the following statements is least accurate regarding Jones' behavior?
A)
Her actions are a violation of the standard concerning misrepresentation, because she promised something she knew the firm could not deliver.
B)
Her actions are a violation of the standard concerning professional misconduct because she deceived her clients.
C)
Her actions are a violation of the Standards only if prosecution results in a felony conviction.


Jones violated Standard I(C) Misrepresentation by promising clients she would allocate more shares than she could deliver. Her actions also violated Standard I(D) Misconduct pertaining to acts of dishonesty, fraud, or deceit which reflects adversely on a member's professional reputation, integrity, or competence. She also violated the Code of Ethics which states that members and candidates must act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, and prospective clients. The specific punishment for the actions is not relevant
作者: kmf229    时间: 2012-3-20 13:37

An investment advisor takes a trip for which his firm will pay the expenses. Upon his return he alters some of the numbers on restaurant receipts to inflate the expenses by $64. Is this a violation of Standard I(D)?
A)
No, if such a crime carries less than a one-year prison term.
B)
Yes, because it reflects adversely on the charterholder’s professional reputation.
C)
Yes, because the amount involved is over $50.


Professional conduct involving dishonesty, fraud, or deceit is a direct violation of Standard I(D), Misconduct.
作者: kmf229    时间: 2012-3-20 13:38

Nicholas Brynne, CFA, is a fixed-income analyst who trades in mortgage-backed securities (MBS). The MBS industry has seen sweeping regulatory changes since Brynne took his current position, and he now feels his understanding of applicable laws and regulatory standards is dated. Brynne must:
A)
update his understanding of applicable laws and regulatory standards relating to his position.
B)
have all trades reviewed by his compliance department until he has obtained an expert level of knowledge in compliance.
C)
rely on his firm’s policies and procedures for guidance on legal and regulatory standards.


See Standard I(A) "Knowledge of the Law." Brynne should update his understanding of applicable laws and regulatory standards relating to his position, although he is not required to be an expert in compliance. Relying only on firm policies and procedures is not sufficient.
作者: kmf229    时间: 2012-3-20 13:40

Michael Bellow, CFA, CAIA, is an investment banker who is involved with an initial public offering (IPO) of NewCo. Because this is Bellow’s first involvement in an IPO, he reports to an experienced supervisor. While reviewing past financial statements provided by NewCo, Bellow suspects that NewCo deliberately overstated its earnings for the past several quarters. Bellow seeks the advice of his firm’s highly competent general counsel and follows the advice given without deviation. Based on the general counsel’s advice, Bellow consults his immediate supervisor about the suspected overstatement of earnings. After reviewing the situation, Bellow’s supervisor explains why NewCo’s calculations of its earnings are correct. Bellow realizes that his inexperience and exuberance initially led him to an incorrect conclusion about NewCo’s earnings.
Which of the following statements about Bellow’s actions involving Standard I(A), Knowledge of the law, and Standard I(C), Misrepresentation, is CORRECT? Bellow:
A)
did not violate either Standard I(A) or Standard I(C).
B)
violated both Standard I(A) and Standard I(C).
C)
violated Standard I(A) but did not violate Standard I(C).


Bellow did not violate Standard I(A), Knowledge of the law, because he sought advice of counsel and followed that advice. Bellow did not violate Standard I(C), Misrepresentation, because he made reasonable and diligent efforts to ensure the accuracy of the information and to avoid any material representation.
作者: kmf229    时间: 2012-3-20 14:06

Which of the following statements about the responsibilities of CFA charterholders is CORRECT? CFA charterholders:
A)
are only obligated to comply with securities laws in the U.S.
B)
must comply with the laws and rules governing their profession and must not engage in any individual behavior that reflects adversely on the entire profession.
C)
need not comply with the laws and rules governing their profession or must not engage in any individual behavior that reflects adversely on the entire profession.


CFA charterholders must comply with the laws and rules governing their profession and must not engage in any individual behavior that reflects adversely on the entire profession. While they should act honorably and follow U.S. securities laws, they are obligated to more than that, as set forth in the Code and Standards.
作者: kmf229    时间: 2012-3-20 14:07

According to the CFA Institute Standards of Professional Conduct, Standard I(A), Knowledge of the Law, members shall not knowingly participate or assist in any violations of laws, rules, or regulations. An analyst:
A)
is held responsible for participating in illegal acts when the law is evident to anyone knowing the law and is held responsible for violations by others when the analyst is unaware of the facts giving rise to the violation.
B)
is held responsible for participating in illegal acts when the law is evident to anyone knowing the law and can participate in a violation by having knowledge of the violation and taking no action to stop it or disassociate from it.
C)
must report all legal violations to the proper regulatory commission and is held responsible for participating in illegal acts when the law is evident to anyone knowing the law.


If you suspect someone is planning or engaging in illegal activities, you should:
作者: kmf229    时间: 2012-3-20 14:07

The SEC’s new stock-trading rule has just gone into effect. The SEC will give brokers a 10-day grace period, during which violators of the rule will be immediately notified and given a chance to remedy their situation to comply with the new rule. If a CFA Institute member unknowingly violates the rule and then remedies the situation within the 10-day grace period, has the member violated Standard I(A)?
A)
No, because the member remedied the situation.
B)
Yes, because the member did not maintain knowledge and know of the rule.
C)
No, because the member unknowingly broke the rule.


Standard I(A) explicitly says that a member shall maintain knowledge and comply with laws, rules, and regulations. By not knowing of the rule, the member broke the standard. If a CFA Institute member accidentally breaks a rule from a careless error and remedies the situation, this would not be a violation of Standard I(A).
作者: kmf229    时间: 2012-3-20 14:09

Lawrence Kelly is the Chief Investment Officer at a money management company that claims it is in compliance with CFA Institute Soft Dollar Standards. For the first time, the company has purchased securities in the country of Santa Rosa. He learns that under Santa Rosen law, one of the company's soft dollar policies is forbidden, yet to conform with the law, Lawrence would have to violate the Soft Dollar Standards, but not the Standards of Professional Conduct. Lawrence:
A)
should follow the Santa Rosen Law and can still claim compliance with CFA Institute Soft Dollar Standards.
B)
must follow the Santa Rosen Law and cease claiming compliance with CFA Institute Soft Dollar Standards.
C)
must follow the CFA Institute Soft Dollar Standards, informing the Santa Rosen regulators of his reasons.


In cases when the Soft Dollar Standards conflict with local law, managers should follow local law
作者: kmf229    时间: 2012-3-20 14:09

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)
inform the Securities and Exchange Commission.
B)
consult with Dewey Manufacturing's legal counsel.
C)
consult with Johnson, Thomas' legal counsel.


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.
作者: kmf229    时间: 2012-3-20 14:10

A member who suspects that a colleague is violating the law should most appropriately:
A)
report the illegal activity to the appropriate regulatory agency.
B)
report the illegal activity to CFA Institute Professional Conduct Program for action.
C)
consult with the company counsel to determine if in fact a law is being violated.


Standard I(A), Knowledge of the Law, applies in this situation. According to this Standard, members shall not knowingly participate or assist in, and must dissociate from, any violation of laws, rules, or regulations.
When members suspect a client or a colleague of planning or engaging in ongoing illegal activities, members should take the following actions:
Note:  The Code and Standards do not require that members report legal violations to the appropriate governmental or regulatory organizations, but such disclosure may be prudent in certain circumstances.
作者: kmf229    时间: 2012-3-20 14:11

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)
reporting the activity to the appropriate authorities.
B)
transferring supervision of the intern to another person.
C)
telling her intern to stop such conduct.

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.
作者: kmf229    时间: 2012-3-20 14:11

CFA Institute believes:
A)
that a maximum level of professional responsibility and conduct dictates that members be aware of and comply with laws, rules, and regulations governing their conduct.
B)
that firms should comply with all domestic laws and regulations and that these laws also govern behavior in foreign markets, regardless of foreign laws and requirements.
C)
that a minimum level of professional responsibility and conduct dictates that members be aware of and comply with laws, rules, and regulations governing their conduct.


CFA Institute’s Code and Standards dictate a minimum level of conduct. Standards should not be based on ethics of upper management and the board of directors of a company. Firms must comply with the strictest applicable standards, whether they be foreign or domestic laws and regulations.
作者: kmf229    时间: 2012-3-20 14:12

Joan Platt, CFA, operates an investment advisory service in New York but maintains an office in Xania. Xania recently established 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 because Xania legally permits this practice.
B)
not use material inside information.
C)
use material inside information, but only after notifying CFA Institute.


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.
作者: kmf229    时间: 2012-3-20 14:12

Which of the following statements about the CFA Institute Code and Standards is most accurate? The Code and Standards:
A)
require members to persuade the perpetrator to cease illegal activities.
B)
do not require that members report legal violations to the appropriate governmental or regulatory organization.
C)
prohibit members from accepting gifts that create a conflict with their employer's interest.


The Code and Standards do not require members to report violations to legal authorities, but such disclosure may be prudent or required in certain circumstances. They do not require members to quit their jobs or to persuade violators to cease illegal activities. They do require that members report the activities to the appropriate person(s) in their own firm and disassociate themselves from the illegal actions. Members must obtain written permission to accept gifts that create a conflict with their employer's interest.
作者: kmf229    时间: 2012-3-20 14:14

Robe Advisory Services operates an office in San Francisco, where it manages portfolios for its clients based in the United States. The firm also maintains an office in Tokyo, where it employs Sam Lee, CFA who researches Japanese stocks. According to the CFA Institute Standards of Professional Conduct, Lee is required to maintain knowledge of and comply with all applicable laws, rules, and regulations in:
A)
both the U.S. and Japan and the CFA Institute Standards of Professional Conduct.
B)
both the U.S. and Japan, but not the CFA Institute Standards of Professional Conduct.
C)
Japan, but not the U.S., and the CFA Institute Standards of Professional Conduct.


To abide by the Standards, employees who work for foreign-based firms are required to apply the stricter of the foreign (here, U.S.) law, the domestic (here, Japanese) law, or CFA Institute standards.
作者: kmf229    时间: 2012-3-20 14:14

Which of the following is a CORRECT statement of a member's duty under the Code and Standards?
A)
A member who trades securities in a country with less strict laws, rules, regulations, or customs may follow those laws if he discloses this information to his client.
B)
In the absence of specific applicable law or other regulatory requirements, the Code and Standards govern the member's actions.
C)
A member is required to comply only with applicable local laws, rules, regulations, or customs even though the CFA Institute code and Standards may impose a higher degree of responsibility or a higher duty on the member.


Members are always, at a minimum, subject to the Code and Standards.
作者: HuskyGrad2010    时间: 2012-3-20 14:22

Mega Securities, a multinational investment advisor based in the United States, employs the following analysts who practice in multiple jurisdictions.
According to the CFA Institute Code and Standards, which of the following statements about Black and White is CORRECT?
Black must adhere to theWhite must adhere to the
A)
law of Country Llaw of Country S
B)
Code and Standardslaw of Country S
C)
law of Country Nlaw of Country L


Because the applicable law in Country L is less strict than the Code and Standards, Black must adhere to the Code and Standards. Because the applicable law is stricter than the Code and Standards, White must adhere to the more strict applicable law of Country S.
作者: HuskyGrad2010    时间: 2012-3-20 14:22

Mega Securities, a multinational investment advisor based in the United States, employs the following analysts who practice in multiple jurisdictions.
According to the CFA Institute Code and Standards, which of the following statements about Black and White is CORRECT?
Black must adhere to theWhite must adhere to the
A)
law of Country Llaw of Country S
B)
Code and Standardslaw of Country S
C)
law of Country Nlaw of Country L


Because the applicable law in Country L is less strict than the Code and Standards, Black must adhere to the Code and Standards. Because the applicable law is stricter than the Code and Standards, White must adhere to the more strict applicable law of Country S.
作者: HuskyGrad2010    时间: 2012-3-20 14:23

Shortly after becoming employed by Valco & Co., an investment banking firm, Stan McDowell, CFA, learns that most of Valco's initial public offerings (IPO) are really effected in order to profit management via price manipulation of the shares. McDowell observes an illegal act, sanctioned by senior management, in progress and refuses to sign off on his responsibility. Instead, McDowell takes the documentation to his supervisor and tells him he should sign it in his place. This action is:
A)
a violation of the Code and Standards since he is required not to knowingly participate or assist in such an act.
B)
an overreaction. Senior management's sanctioning of the act absolves McDowell from his ordinary responsibility as a CFA Institute member.
C)
a suitable reaction, and he is in compliance with the Code and Standards.


McDowell, by his action in taking the documentation to his supervisor, is knowingly participating in and/or assisting in an illegal act. This is clearly prohibited under Standard I(A), and he is in violation of the Standard.
作者: HuskyGrad2010    时间: 2012-3-20 14:24

If an analyst suspects a client or a colleague of planning or engaging in ongoing illegal activities, which of the statements about the actions that the analyst should take is most correct? According to the CFA Institute Standards of Professional Conduct, the analyst should:
A)
consult counsel to determine the legality of the activity and disassociate from any illegal or unethical activity if the member has reasonable grounds to believe that the activity is illegal or unethical.
B)
disassociate from any illegal or unethical activity if the member has reasonable grounds to believe that the activity is illegal or unethical.
C)
consult counsel to determine the legality of the activity.


According to the procedures for compliance involving Standard I(A), CFA Institute members should determine legality and disassociate from any illegal or unethical activity.
作者: HuskyGrad2010    时间: 2012-3-20 14:24

The Standards of Professional Conduct explicitly outlines responsibilities to four groups. Which of the following is NOT a group mentioned in that list?
A)
The investing public.
B)
The profession.
C)
The Federal Reserve.


The Standards explicitly mention responsibilities to the profession, employers, clients, prospects, and the investing public. The Federal Reserve is not mentioned.
作者: HuskyGrad2010    时间: 2012-3-20 14:25

Maria Valdes, CFA, is an analyst for Venture Investments in the country of Newamerica, which has laws prohibiting the acceptance of any gift from a vendor if the gift exceeds US $250. Valdes has evidence that her Venture Investments colleague, Ernesto Martinez, CFA, has been receiving gifts from vendors in excess of US $250.Valdes is obligated to:
A)
disassociate herself from the activity, and urge Venture to persuade Martinez to cease the activity.
B)
disassociate herself from the activity, urge Venture to persuade Martinez to cease the activity, and inform CFA Institute of the violation.
C)
disassociate herself from the activity, urge Venture to persuade Martinez to cease the activity, and inform CFA Institute and regulatory authorities of the violation.


Standard I(A), Knowledge of the Law requires members who have knowledge of colleagues engaging in illegal activities to disassociate from the activity and urge their firms to persuade the individual to cease such activity. Reporting to regulatory authorities may be prudent in certain circumstances, but is not required. Reporting to CFA Institute is not required.
作者: HuskyGrad2010    时间: 2012-3-20 14:25

John Martin, an analyst, discovers that Jurix Co. has knowingly misstated information in its prospectus. To comply with CFA Institute’s Code of Ethics and Standards of Professional Conduct, Martin's most appropriate course of action is to:
A)
call the appropriate regulatory agency and report the action.
B)
resign from his job in order to disassociate from the potentially illegal activity.
C)
report the finding to the appropriate supervisory person in his firm.


To comply with the Code and Standards, John should notify the appropriate supervisory person in his firm of the violation.
作者: HuskyGrad2010    时间: 2012-3-20 14:26

An analyst, who is a CFA charterholder, is working in a foreign country. Which of the following statements is CORRECT? The analyst is:
A)
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.
B)
governed by the laws and standards of the country in which he is living and working.
C)
governed by CFA Institute's Code and Standards.


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.
作者: HuskyGrad2010    时间: 2012-3-20 14:26

Josh LeBlanc, a CFA charterholder, is an investment analyst for a small stock brokerage firm. He wants to acquire and maintain knowledge about applicable laws, rules, and regulations relating to his professional activities. According to the CFA Institute Standards of Professional Conduct, which of the following ways is least likely to meet compliance procedures?
A)
Review written compliance procedures on a regular basis.
B)
Rely on past practices followed within his firm.
C)
Keep informed about changes in applicable laws, rules, and regulations.


LeBlanc should follow the compliance procedures under Standard IA -- Knowledge of the law. Relying on his firm’s past practices may be insufficient for LeBlanc to stay current with changes
作者: HuskyGrad2010    时间: 2012-3-20 14:27

Janet Green, CFA, provides investment advice and other services to clients in several countries. She resides in Country A whose securities laws and regulations are less strict than the Code and Standards. She also conducts business with clients in Country B, which has no securities laws or regulations, and in Country C, which has securities laws and regulations that are stricter than the Code and Standards. Which of the following statements is CORRECT? According to CFA Institute Standards of Professional Conduct, Green must adhere to the Code and Standards in:
A)
Country A, Country B, and Country C.
B)
Country A but the law in Country B and Country C.
C)
Country A and Country B but the law in Country C.


Green needs to follow Standard I(A) -- Knowledge of the law. In Country A, Green must adhere to the Code and Standards because Country A’s laws are less strict. In Country B, Green must also adheres to the Code and Standards because Country B has no securities laws. Because Country C’s applicable law is stricter than the requirements of the Code and Standards, Green must adhere to the laws of Country C.
作者: HuskyGrad2010    时间: 2012-3-20 14:27

Sometimes a CFA Institute member simply feels a law has been violated by his firm, and sometimes the member knows a law has been violated. Which of the following pairs of guidelines is CORRECT with respect to the first step a member should take in each case? The member should first contact:
A)
the firm's counsel if he feels a law has been violated and the SEC if he knows a law has been violated.
B)
the firm's counsel if he feels a law has been violated and contact his supervisor if he knows a law has been violated.
C)
his supervisor in the firm if he feels a law has been violated and contact the firm's counsel if he knows a law has been violated.


Standard I(A) says that when a member feels a law has been broken, the member should seek advice from the firm’s counsel. If the member feels the advice is unbiased and competent, the member should follow it. If the member knows a law has been violated, the member should contact a supervisor.
作者: HuskyGrad2010    时间: 2012-3-20 14:28

Jason Blackwell, CFA, works as an investment manager for Mega Capital, a large multinational brokerage firm. He resides in a country whose applicable law is stricter than the Code and Standards but does business with clients in a country whose applicable law is less strict than the Code and Standards. Blackwell decides to follow the Code and Standards for clients in the less strict country. While Blackwell is still employed at Mega, Lego Associates verbally asks Blackwell to review client portfolios during evenings and weekends for a fee. Blackwell gets written consent from his immediate supervisor at Mega to undertake this independent activity for a one-month trial basis.Which of the following statements about Blackwell’s actions involving Standard I, Professionalism, and Standard IV(A), Loyalty is most accurate? Blackwell:
A)
violated Standard I but did not violate Standard IV(A).
B)
violated both Standard I and Standard IV(A).
C)
did not violate either Standard I or Standard IV(A).


Blackwell violated Standard I, Professionalism. Because the applicable laws in his resident county were stricter than the Code and Standards, he must adhere to the more strict applicable law
作者: HuskyGrad2010    时间: 2012-3-20 14:28

Bob Smith, CFA, is an outside board member of Atlantic Technologies, but is not paid by the firm for his services. An employee at Atlantic informs Smith that Atlantic has improperly timed the booking of contracts to achieve the desired quarterly financial results. The misleading financial statements would turn losses into profits. Smith confers with the firm's legal counsel who indicates that this conduct is, in fact, illegal. Smith urges Sharon White, Atlantic's chief operating executive, to change the financial statements, but she refuses to do so. According to CFA Institute Standards of Professional Conduct, which of the following statements best describes what Smith should do in this situation?
A)
Smith should immediately make CFA Institute aware of the situation at Atlantic.
B)
Smith should wait until the next board meeting, which is scheduled in two weeks, to make other board members aware of the situation.
C)
Smith should promptly disassociate himself from Atlantic's actions by resigning as a director or by reporting the activities to the appropriate authorities.


Smith should disassociate from any illegal activity by resigning as a director or by reporting the activities to appropriate authorities. Inaction combined with continuing association with Atlantic's illegal conduct may be construed as participation, or assistance, in the illegal conduct.
作者: HuskyGrad2010    时间: 2012-3-20 14:29

A CFA Institute member is also a member and the portfolio manager of an environmentalist group. In its charter, the environmentalist group lists a group of companies its members should boycott. The CFA Institute member would violate Standard I(A) concerning obeying all rules and regulations if the member:
A)
purchases stock of a boycotted firm for the group's portfolio.
B)
performs either of the activities listed here.
C)
actively protests against a publicly traded firm boycotted by the group.


Standard I(A) says the member must be guided by all applicable rules and regulations of professional associations governing the member’s professional activities. Purchasing the stock for the firm would be a violation because it involves the member’s professional activities and the rules of a group to which the member belongs and works for. Actively protesting would not be covered by that standard.
作者: HuskyGrad2010    时间: 2012-3-20 14:29

For an employee with the CFA designation who works for a firm, which of the following is NOT necessary to meet the requirements of the Code and Standards?
A)
It is recommended that their employer is aware of the Code and Standards.
B)
Recommend notifying their employer of their responsibility to follow the Code and Standards.
C)
Deliver a copy of the Code and Standards to their employer.

It is no longer required but recommended that CFA members and candidates notify their employer
作者: HuskyGrad2010    时间: 2012-3-20 14:30

A government committee has concluded that investment company fees should be disclosed to clients each quarter and has proposed new legislation to require this. Currently, the legal requirement is to report such data annually. In compliance with current legal requirements, Dolphin Investments discloses its fees annually. Eugene Shin, CFA, Dolphin's compliance officer, learns of the proposed changes but does not convert Dolphin's reporting to a quarterly basis. Shin's decision not to act:
A)
constitutes professional misconduct as defined in the Code and Standards.
B)
is a violation of his duty to employer as defined in the Code and Standards.
C)
is not a violation of the Code and Standards.


The potential change in the law is only a proposal at this stage. There is no violation as long as Dolphin is following the regulations currently in force.



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