I don’t know about you guys but ethics is so subjectively confusing. Here’s two examples that I’m kinda stumped on. Please try the questions first THEN look at the answers.
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1. Tony Roberts, CFA, is a portfolio manager at Delta Securities. He suspects a colleague, who is not a member or candidate, of ongoing activities that while not illegal, violate CFA Institute Standards of Professional Conduct. Roberts and the colleague both report to the same manging director at Delta, and are both currently being considered for a promotion to senior portfolio manager. According to the CFA Institute Stds of Prof Cond., Roberts LEAST LIKELY:
A. is required to dissociate from the activities that violate the Code and Standards if they continue.
B. is governed by the Code and Standards and not local law in this situation
C. may need to resign his position with Delta Securities in order to fully dissociate from the activities
D. must report the suspected violations of the Code and Standards first to his supervisor and then to CFA Institute
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2. Robert Miguel, CFA, is a portfolio manager for a large investment advisory firm. In appreciation for his impressive portfolio returns last quarter, one of his clients, Kevin Goodman, has invited Miguel and his wife to be his guests at his luxury suite for a major league baseball playoff game. Miguel, a baseball fan, accepts the invitation and attends the game. The next day at work, Miguel discusses the outcome of the game with his supervisor but doesn’t mention the fact that he attended the game with a client. According to the CFA Institute Stds of Prof Conduct, Miguel’s actions:
A. are in violation of both Standard I(B) Independence and Objectivity and Standard I(A) Knowledge of the Law.
B. are not in violation of Standard I(B) Independence and Objectivity or Standard I(A) Knowledge of the Law.
C. are in violation of Standard I(B) Independence and Objectivity but are not in violation of Standard I(A) Knowledge of the Law.
D. are not in violation of Standard I(B) Independence and Objectivity but are in violation of Standard I(A) Knowledge of the Law.
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Confused with:
1.) I thought the first thing to do when there is a sense of violation is to contact your supervisor then the authority then if needed leave your employer. But they’re saying you’re LEAST likely to contact your supervisor in this situation. Maybe the ‘catch’ here was “then to the CFA Institute”, we don’t HAVE TO contact the CFA Institute right?
2.) I don’t know why this is a violation of Standard I(A) Knowledge of the Law, what law, rule, or regulation is he in violation of? Going to a baseball game with his wife? Because baseball are for guys? But really.
Answers:
1. D
2. A
Any help would be appreciated.
-alsrs作者: BelalM 时间: 2013-3-30 20:36
My .02:
1) I believe you are correct with the “catch phrase” in the second part of answer D. Very rarely (if ever) do you have to report to CFA Institute. Most scenarios have you reporting to your supervisor or compliance/legal counsel if something comes up. The other answers also seem like that that might be required of you in the future as a result of this situation. The act is not illegal but you’re bound by the Code of Ethics anyway. The Code states that you should disassociate from the activity if it continues, and in extreme cases you may have to resign if nothing is being done to accomodate your situation.
2) Thinking that the PM should have gotten written consent from his/her employer before accepting this gesture from the client. As is, an outside third-party observer might see this as a violation of independence/objectivity, since the PM may show favourtism toward this client’s portfolio in the future. To clarify your question, any time a CFA candidate/member violates the Code of Ethics, they also violate Standard I(A) Knowledge of the Law, since they knew about what they should/shouldn’t be doing.
If any part of my logic here is flawed feel free to pick the solutions apart作者: Windjam 时间: 2013-3-30 20:37
I agree with the confusion part…
but then let me tell you how I thought after checking the answers
1) here a) there is just a suspicion
b) the suspect in a non-CFA member.. so informing CFA inst. is not reqd.
Here, the standards talk about duty to employers and subordinates but does not paticularly talk about colleagues. Don’t get me wrong if you KNOW of a fraud disassociate from the violation.
2) totally stumped.. need someone to step in作者: kkn006 时间: 2013-3-30 20:37
1 is okay.
2 is the problematic one. By not mentioning this to his employers he violated standard IV(B) and VI(A), meaning that he violated 1(A) surely. But I cant understand how he violated I (B).作者: soverby 时间: 2013-3-30 20:37
For 2.
Any circumstances favors the clients in the future, such as this case, the PM may favor his client more than other clients (because of this ‘free treat’ from his client) this’ll impair his judgements; independence and objectivity, this’ll be a violation.
I thought violating I (A) is mostly applicable for laws and regulations? But this might be why I thought question 2 was confusing.作者: wilslm 时间: 2013-3-30 20:37
I(A) is almost always when other standards are violated.作者: brainsX 时间: 2013-3-30 20:37
Just a quick heads-up.
If any of the answers state “contact CFA institute”, you can eliminate that answer choice.
