Reading 2-VII: Standards of Professional Conduct & Guidan 2011, center, style, label, class

土豆妮

Session 1: Ethical and Professional Standards
Reading 2-VII: Standards of Professional Conduct & Guidance: Responsibilities as a CFA Institute Member or CFA Candidate

LOS B.: Reference to CFA Institute, the CFA Designation, and the CFA Program.

 

 

When Wes Smith first joined Advisors, Inc., he was excited that all the analysts at the firm had the CFA designation. In letters to prospective clients, he states that this ensures that Advisors can provide better service than their competitors. With respect to Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, this is:

A) a violation because he cannot guarantee better service.

B) a violation because he mentions the CFA designation in the letter.

C) a violation for both mentioning the CFA designation and saying the firm can guarantee better service.

---

 

According to Standard VII(B), the analyst cannot guarantee better service. Smith can mention the fact that all analysts have the designation, but he is limited in what he can say with respect to this fact. He could say, for example, that this means the analysts all had to take and pass three rigorous exams.

土豆妮

During 2004 Nancy Arnold received an undergraduate business degree with a management major and completed all requirements for the CFA designation imposed by CFA Institute. She is applying for employment at several brokerage firms. Her resume states, “I was awarded the CFA degree in 2004 by CFA Institute.” Her resume also states that she graduated “with honors” and majored in finance. Her grade point average was 3.48 but “with honors” requires a 3.50 grade point average.

Which of the following statements about Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, and Standard I(C), Misrepresentation, is CORRECT? Arnold:

A) violated both Standard VII(B) and Standard I(C).

B) violated Standard I(C) but she did not violate Standard VII(B).

C) did not violate either Standard VII(B) or Standard I(C).

---

Arnold violated Standard VII(B). The CFA designation should not be referred to as a degree. Arnold also violated Standard I(C) because her claim that she graduated “with honors” is not true.

土豆妮

Nichole Zeller and Randy Toffler have both passed Level II of the CFA Exam Program and have registered for Level III. Zeller circulates a resume stating that she is a candidate for the CFA designation and has passed Level II of the CFA program. Toffler circulates a resume stating that he is a CFA II. Which of the following statements is CORRECT?

A) Only Zeller has violated the Code of Standards.

B) Both Zeller and Toffler have violated the Code of Standards.

C) Only Toffler has violated the Code of Standards.

---

The Code and Standards permit an individual to state that he or she is a candidate for the CFA designation as long as the person is registered for the next CFA exam. The same individual may state the fact that he or she has passed Level I or II of the CFA program. There is no partial designation, such as CFA II.

土豆妮

Judy Albert and Bob Tye, who recently started their own investment advisory business, plan to take the Level III CFA examination next year. Albert's business card reads, "Judy Albert, CFA Candidate." Tye has not put anything about the CFA on his business card. However, the firm's promotional materials describe the CFA requirements and indicate that Tye participates in the CFA program and has completed Levels I and II. According to CFA Institute Standards of Professional Conduct:

A) Both Albert and Tye have violated the Standards.

B) Albert has violated the Standards but Tye has not.

C) Neither Albert nor Tye has violated the Standards.

---

On letterheads and business cards and in directory listings, only the mark CFA or the words Chartered Financial Analyst should appear after the charterholder's name.

土豆妮

Jake Miles, CFA, includes the following phrase on his business card: “Jake Miles is your trusted local CFA.” Is this a violation of Standard VII(B)?

A) Yes, because he cannot put the initials "CFA" on his business card.

B) No, because his CFA Institute membership indicates that he is indeed trustworthy.

C) Yes, because he uses CFA as a noun.

---

The initials CFA cannot be used as a noun. The initials can appear on a business card but cannot be used to exaggerate the meaning or implications of membership.

土豆妮

All of the following statements in promotion of your services are in violation of CFA Institute Standards of Practice handbook EXCEPT:

A) I passed Level II of the CFA Program in 2003.

B) I guarantee under my management that you will receive returns in excess of the market index average.

C) based upon my research, you will achieve a 20% compound annual rate of return on small cap stocks over the next 5 years.

---

Candidates may refer to the CFA level(s) passed and the associated dates as long as a partial designation is not implied. They may not guarantee or promise a given level of return.

土豆妮

An analyst has not paid his CFA Institute dues for several years but has filed a professional conduct statement annually. Which of the following statements is CORRECT regarding his status with CFA Institute? The analyst:

A) cannot refer to ever having been a member.

B) is no longer an active member.

C) is still an active member.

---

Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, applies. In order to use the CFA designation, the member must pay annual dues and submit a yearly Professional Conduct Statement.

土豆妮

Robert Hopkins has earned the right to use the CFA designation and wants to indicate this on his business card. According to CFA Institute Standards of Professional Conduct, which of the following is the proper use of the professional designation on his business card?

A) Robert Hopkins, cfa

B) Robert Hopkins, CFA Charterholder

C) Robert Hopkins, C.F.A.

---

The CFA designation should always be capitalized and shown without periods. The CFA designation should not be referred to as a degree. Placing the designation "CFA" or "CFA Charterholder" after one's name on a resume, business card, brochure, or other published material is appropriate.

土豆妮

Ralph Lim and Susan Bland have both passed Level I of the CFA Program. Both are currently enrolled to sit for Level II. Lim's business card reads, "Ralph Lim, CFA Level I." Bland's resume states, "Level II Candidate in the CFA Program." According to CFA Institute Standards of Professional Conduct involving use of the professional designation:

A) Both Lim and Bland violated the Standard.

B) Bland violated the Standard, but Lim did not.

C) Lim violated the Standard, but Bland did not.

---

There is no designation for someone who has passed Level I, Level II, or Level III of the CFA examination. Candidates may state, however, that they have completed Level I, II, or III, as the case may be, in the CFA Program. Thus, Lim violated the Standard, but Bland did not.

土豆妮

Lucy Ackert and Chris Brown prepared the following information to be included in the promotional materials of their employer, Lofton Securities.

• Lucy Ackert is one of five CFAs at Lofton Securities. She satisfied all requirements for the CFA designation in 1998.
• Chris Brown holds a CFA Level I designation, which he passed in 2001. He is registered to take the next scheduled Level II examination.

Are the promotional materials prepared by Ackert and Brown fully consistent with the Standards of Professional Conduct?

A) Ackert: Yes. Brown: No.

B) Ackert: No. Brown: Yes.

C) Ackert: No. Brown: No.

---

Neither statement is fully consistent with Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program. The CFA designation must always be used as an adjective and never as a noun as Ackert used in her promotional description. Correct use of the CFA designation would be: “Lucy Ackert is one of five CFA charterholders at Lofton Securities.” No designation exists for someone who has passed Level I of the CFA examination. Thus, Brown’s statement saying that he “holds a CFA Level I designation” represents incorrect use. A correct statement would be: “Chris Brown passed Level I of the CFA examination in 2001.”

---