Reading 2-I: Standards of Professional Conduct & Guida

country, black, manager, investment

Q5. 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) violated Standard I but did not violate Standard IV(A).

C) did not violate either Standard I or Standard IV(A).

Q6. 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 TRUE? According to CFA Institute Standards of Professional Conduct, Green must adhere to the Code and Standards in:

A) Country A and Country B but the law in Country C.

B) Country A, Country B, and Country C.

C) Country A but the law in Country B and Country C.

Q7. 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 FALSE? Parsons:

A) should urge his firm to attempt to persuade the perpetrator to cease such conduct.

B) should consult counsel to determine whether the conduct is, in fact, illegal.

C) is required to report this legal violation to the appropriate governmental or regulatory organizations.

Q8. 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) Yes, because the member is bound by the Code of Ethics.

B) Yes, because the member could have hurt someone in the fight.

C) No, because a fight at a rugby game is not a professional activity.