Reading 2-I: Standards of Professional Conduct & Guidan

black, white, style, members

Q36. 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) less strict, they should make a judgment call on which to follow, the Code and Standards or the local laws and requirements.

B) more strict, they must adhere to the applicable laws.

C) more strict, they must still follow the Code and Standards.

Q37. Benito Salvatore, CFA, is licensed in the established country of Oldworld but has clients and makes investments in the emerging county 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.

Q38. 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) take investment action based on this information only for his clients in Country N but not for his clients in Country L or himself.

C) not take investment action on the basis of this information.