luckygiftvn

Ron Vasquez is registered to sit for the CFA Level II exam. Unfortunately, Vasquez has failed the exam the past two years. In his frustration, Vasquez posted the following comment on a popular internet bulletin board: “I believe that CFA Institute is intentionally limiting the number of charterholders in order to increase its cash flow by continuing to fail candidates. Just look at the pass rates.”

Which of the following statements regarding Vasquez’s conduct is CORRECT? Vasquez is:

A) not in violation of Standard I(D), Misconduct or Standard VII(A), Conduct as Members and Candidates in the CFA Program.

B) in violation of Standard VII(A), Conduct as Members and Candidates in the CFA Program, but not in violation of Standard I(D), Misconduct.

C) in violation of both Standard I(D), Misconduct and Standard VII(A), Conduct as Members and Candidates in the CFA Program.

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Standard VII(A), Conduct as Members and Candidates in the CFA Program does not prohibit expressing opinions about the program or the CFA Institute. Thus, Vasquez is not in violation. Nothing in the facts indicates a violation of Standard I(D), Misconduct. Standard I(D) deals with professional conduct involving dishonesty, fraud, or deceit.

kasinkei

While on a business trip, John Hayes, CFA, found a notebook that had apparently been left in the waiting area of an airport. Hayes opened the notebook and read the title: Confidential: Level II CFA Examination. Before returning the notebook to CFA Institute, he made a copy and gave it to Linda Sacket, one of his firm's analysts, who was a candidate for Level II of the CFA examination. Hayes reasoned that CFA Institute would not use these questions and that Sacket would benefit from reviewing these questions. Sacket read the questions and guideline answers before taking the Level II examination. According to the CFA Institute Standards of Professional Conduct:

A) Hayes violated the Standards, but Sacket did not.

B) Sacket violated the Standards, but Hayes did not.

C) both Hayes and Sacket violated the Standards.

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Both violated Standard VII(A) because they committed an act that compromised the validity of the examinations leading to the award of the right to use the CFA designation.

kasinkei

A CFA charterholder coaches a fellow employee as that colleague studies for the CFA exams. The charterholder tells the colleague all that she remembers from her exams and how they were constructed. This is:

A) not a violation of the standards.

B) a violation of Standard VII(B) concerning use of the designation.

C) a violation of Standard I(D) concerning professional misconduct.

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This is a violation because even though it does not necessarily compromise the integrity of the next exam, it does violate the Code of Ethics, Standard I(D) Misconduct, and Standard VII(A) Conduct as Members and Candidates in the CFA Program.  At the beginning of the CFA examination, all candidates are required to sign a statement saying they will not divulge any information regarding the exam to anyone.  In this question the Code of Ethics was broken because it requires CFA candidates and CFA Institute members to act in an ethical manner.  Standard I(D) Misconduct was broken because it requires members and candidates to not engage in any dishonest conduct.  Standard VII(A) Conduct as Members and Candidates in the CFA Program was broken because it requires members and candidates to not disregard the rules and policies of the CFA Program related to examination administration.

kasinkei

Stephanie Irons, Level II CFA candidate, regularly posts in Internet chat rooms dedicated to candidates studying for the Level II exam. Throughout the season, she and other candidates discuss curriculum content in great detail. Three days after the exam, she returns to the site and vents her frustrations over complicated exam questions by posting questions she remembers on the site, and asking others for their responses and reasoning. Other candidates follow suit and post the questions they remember. Within a week, Irons and her fellow candidates are able to reconstruct about 85% of the exam from their collective memory. Finding the exercise cathartic, she is then able to return to her job and personal life and wait for her results. Irons and her fellow candidates are most likely:

A) in violation of Standard VII(A) "Conduct as Members and Candidates in the CFA Program" for providing confidential information about the exam.

B) in violation of Standard VII(A) "Conduct as Members and Candidates in the CFA Program" for discussing curriculum content in a public forum prior to the exam.

C) not in violation as the information about the actual exam contents was posted after the conclusion of the exam.

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Standard VII(A) "Conduct as Members and Candidates in the CFA Program" prohibits members and candidates from providing confidential information about the exam – even after the conclusion of the exam.

kasinkei

Stephanie Orange, Level II CFA candidate, posts blogs for her exam study group three days after the exam to vent her frustrations over the exam. However, to avoid disclosing what was actually on the exam, she only discusses topic areas she thought would be on the exam that were not. She writes "...the topics selected were unnecessarily obscure. Important items like FCF, DDM, and Residual Income were ignored completely..." Orange is most likely:

A) not in violation as the information was only about what was NOT on the exam.

B) in violation of Standard VII(A) "Conduct as Members and Candidates in the CFA Program" for providing confidential information about the exam.

C) not in violation as the information about the actual exam contents was posted after the conclusion of the exam.

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Standard VII(A) "Conduct as Members and Candidates in the CFA Program" prohibits members and candidates from providing confidential information about the exam – even after the conclusion of the exam. Examples include broad topical areas tested or not tested.

kasinkei

Joe James, CAIA, CPA, is a CFA Level II candidate living in Boston. In the course of his accounting practice, James often refers clients to a local law firm specializing in estate planning. James does not violate client confidentiality and does not receive compensation for the referral. However, the law firm often gives James tickets to the theater and major sporting events.

Which of the following statements regarding disclosure is CORRECT? James:

A) need not disclose the benefits received for referring clients because no compensation is received.

B) must disclose the benefits received for referring clients to the law firm.

C) need not disclose the benefits received for referring clients because the clients were developed in the course of his accounting practice.

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Standard VI(C), Referral Fees, requires members to disclose to clients and prospects any consideration or benefit received by the member or delivered to others for the recommendation of any services to a client or prospect. James has received a benefit (free tickets), which must be disclosed to the clients referred by James. Disclosure will allow the clients to determine any partiality of the recommendation.

kasinkei

Wes Smith, CFA, refers many of his clients to Bill Towers, CPA, for accounting services. In return, Towers performs routine services for Smith, such as his tax returns, for no charge. Towers has just become a member of CFA Institute. With this development, Towers must:

A) only reveal to the prospects referred by Smith that he performs services for Smith.

B) discontinue his services for Smith.

C) reveal to the prospects referred by Smith that he performs services for Smith, along with the estimated value of those services.

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According to VI(C), Referral Fees, as a member of CFA Institute, Towers must tell his clients about the payment in kind to Smith along with an estimate of the value of those services.

kasinkei

Standard VI(C), Referral Fees, is applicable to:

A) only cash consideration received for the recommendation of products or services.

B) all consideration received or paid for the recommendation of products or services.

C) only consideration paid in soft dollars for the recommendation of products or services.

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According to Standard VI(C), Referral Fees, consideration includes all fees that are paid in cash, soft dollars, and in kind. Referral fees must be disclosed to the client or employer whether the consideration is received by or paid to others for the recommendation.

kasinkei

A member or candidate that receives consideration from others for the recommendation of products or services, must disclose the estimated dollar value of the consideration paid in:

A) cash, soft dollars, or in kind.

B) cash or soft dollars only.

C) cash only.

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According to Standard VI(C), Referral Fees, consideration includes all fees that are paid in cash, soft dollars, and in kind. Referral fees must be disclosed to the client or employer before engaging in an agreement to provide services.

kasinkei

Which of the following statements about Standard VI(C), Referral Fees, is CORRECT?

A) Referral fees may be disclosed before or after proceeding with an agreement for service.

B) Referral fees must be disclosed after proceeding with an agreement for service.

C) Referral fees must be disclosed before proceeding with an agreement for service.

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According to Standard VI(C), referral fees must be disclosed before proceeding with an agreement for service in order for the client or employer to compute the full cost of the service and to evaluate any potential partiality of the recommendation.