Reading 2-III: Standards of Professional Conduct & Guida

black, problem, Investment, auto

Q4.Andrew Mader, CFA, is an analyst with Metro Investment Services. During lunch with some of Metro's managers, Mader is told, "There are going to be major problems at Gebco (a firm that Metro had brought public last year). I was just over there and the place is just crawling with government inspectors.” Mader had just issued a report with a "buy" recommendation on Gebco last week. Mader should:

A) immediately issue a new report, but only after stopping by Gebco himself to corroborate the story.

B) not do anything because to do so would violate his obligation to preserve confidentiality.

C) not do anything to avoid a violation of fair dealing.

Q5.Greg Stiles, CFA, CAIA, has recently liquidated most of a client’s portfolio because the client is planning to buy a house. Stiles informs one of the brokers in his office who has his real estate license about the plans of his client. With respect to Standard III(E), Preservation of Confidentiality, this action:

A) is appropriate since Stiles keeps the information in the firm.

B) is appropriate since Stiles only tells a licensed salesman.

C) violates the Standard unless the client asks Stiles to tell the licensed salesman.

Q6.Greg Stiles, CFA, keeps a list of his clients’ birthdays and has personally sent them a birthday card each year at the appropriate time. With respect to this action, which of the following may be a violation of Standard III(E), Preservation of Confidentiality?

A) Sending a gift along with the card.

B) Hiring a company outside the firm to perform the task.

C) The mere act of sending a birthday card each year.

Q7.Greg Stiles, CFA, may withhold from CFA Institute information about a client acquired in the regular performance of his duties:

A) for neither of the reasons listed.

B) only if Stiles is a relative of the client.

C) only if Stiles has a special confidentiality agreement with the client.

Q8.While servicing his clients’ accounts, an analyst who is a CFA charterholder, determines that one client is probably involved in illegal activities. According to Standard III(E), Preservation of Confidentiality, the analyst may NOT do which of the following?

A) Contact CFA Institute about the determination.

B) There are no exceptions in this list.

C) Contact the appropriate governmental authorities about the determination.