Patricia Cuff is the chief financial officer and compliance officer at Super Selection Investment Advisors that has incorporated the CFA Institute Code of Standards into the firm’s compliance manual. Karen Trader is a portfolio manager for Super Selection. Trader is friendly with Josey James, president of AMD, a rapidly growing biotech company. Trader has served on AMD’s board of directors for the last three years. James has asked Trader to commit to a large purchase of AMD stock for her portfolios. Trader had previously determined that AMD was a questionable investment but agreed to reconsider. Her reevaluation deemed the stock to be overpriced, but she nevertheless decides to purchase for her portfolios. Which standard was NOT broken?
A) IV(A)–Loyalty.
B) I(C)–Misrepresentation.
C) IV(C)–Responsibilities of Supervisors.
Your answer: B was incorrect. The correct answer was A) IV(A)–Loyalty.
IV(A) Loyalty was not broken because this standard involves going into a business that competes with your employer. IV(C) Responsibilities of Supervisors was breached because Trader broke several CFA Institute Standards which Cuff should have enforced. I(C) Misrepresentation was broken because Trader purchased stock for her clients even though she thought AMD was a questionable investment.
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Can someone elaborate on how his violates Standard I (C) - Misrepresentation?作者: jbaldyga 时间: 2013-4-5 23:09
The analyst believes that it’s a bad investment yet purchases it for her portfolios as if it were a sound investment- that’s misrepresenting her true opinion of the stock which is that it’s overvalued.
better question- incorporated the CFA Institute Code of Standards into the firm’s compliance manual
this is ok
but you should not merge a code of ethics and a compliance manual, right?
what’s the difference code of standards and code of ethics? if someone could clarify to me when it’s ok to merge stuff and when it’s not, that would be EXTREMELY helpful as I got this question wrong on last year’s exam and we had some pretty lengthy discussion on it after the test last year. i need to find those pages in the handbook that talk about yes/no merging stuff…作者: dreampak 时间: 2013-4-5 23:09
im gonna start reading ethics over the weekend banni. any advice on whether to read the CFAI book for that or SOPH ?作者: ajpheif16 时间: 2013-4-5 23:09
both are the same!
CFAI book - you have to lug the 600 page tome.
SOPH - 180 pages of “fun”.
so take your choice of poison.作者: ShooterMcCFA 时间: 2013-4-5 23:10
What is SOPH?作者: mp3bu 时间: 2013-4-5 23:10
standards of practice handbook. (or the chapter 1 downloadable from the CFAI site).作者: mik82 时间: 2013-4-5 23:10
bannisja - It would be great if you could share the page numbers in the handbook that talk about the merge stuff
Thanks作者: clearlycanadian 时间: 2013-4-5 23:11
i know i got to the compliance vs code of ethics in my reading 2 days ago, so it’s somewhere b/t maybe pg 60-80. but i recall last year’s portion of combining maybe these standards or whatever they are with compliance (being ok) as part of the “OPTIONAL” reading… it was like 1 sentence but that’s where the answer was. when I stumble upon it, will try to post it up. if anyone else just happened to read this section recently, by all means post up the subtle differences. it was tested last year and i got a big fat -1 on it.
CPK is right about the book vs the SOPH- same, just pick the book you want to read out of. it’s a real page turner.
