1215

John Johnson, portfolio manager at Sunshine Investments, has passed all three levels of the CFA? Program and has completed his work experience requirements. He expects to receive his charter in the near future. He includes the following statement in his firm’s brochure: “Johnson has passed all three levels of the exam and has completed the required work experience for the CFA Charter. He is eligible for the CFA Charter and expects to receive the charter in the near future. Over the years, he has demonstrated a superior performance and his CFA Charter will be rightfully awarded.” Johnson has:

A) violated CFA Institute Standards of Professional Conduct because he advertised the CFA Charter before actually obtaining it.

B) not violated CFA Institute Standards of Professional Conduct because he met all disclosure requirements.

C) violated CFA Institute Standards of Professional Conduct because he implied superior performance that would be linked to the CFA Charter.

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According to Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, Johnson may indicate that he has completed the requirements and is eligible for the CFA charter along with an accurate explanation of the requirements. However, he may not imply that the designation would mean superior performance capabilities.

1215

A CFA Institute member puts the following statement on her resume: “I passed each level of the CFA exam on the first try.” Is this a violation of Standard VII(B)?

A) Yes, because she incorrectly refers to the CFA exam.

B) No, because it is a statement of fact.

C) Yes, because saying she passed exams on the first try is not appropriate.

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The statement is not a violation because it is a fact. However, the member must not go on to claim superior performance.

1215

Ted Willis received his CFA designation in 1998 and was employed as an investment counselor until 2003.  During the past several years, Willis has been out of work because of a serious illness.  He also failed to pay his annual CFA Institute dues during the current year.  Willis has now recovered and accepted a position with an investment advisory firm.  His new business card says, “Ted Willis, CFA.”  As part of his job with his new firm, Willis uses PowerPoint? to make presentations to groups of prospective clients.  He obtained some of these PowerPoint? slides from web sites, but removed the copyright notice before showing the slides to prospective clients.

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 most accurate? Willis:

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

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

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

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Willis violated Standard VII(B) because his right to use the CFA designation was suspended when he stopped paying CFA Institute dues. Thus, he can no longer use the CFA designation on his business card. Willis also violated Standard I(C) because he was guilty of plagiarism. He inappropriately used copyrighted material, which provided the impression that such material was his own.

1215

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 mentions the CFA designation in the letter.

B) a violation because he cannot guarantee better service.

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

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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.

1215

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

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

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

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

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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.

1215

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.

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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.

1215

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 Toffler has violated the Code of Standards.

B) Only Zeller has violated the Code of Standards.

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

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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.

1215

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) Yes, because he uses CFA as a noun.

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

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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.

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1215

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: No. Brown: No.

B) Ackert: Yes. Brown: No.

C) Ackert: No. Brown: Yes.

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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.”

1215

Julie Stades retired several years ago and relinquished her membership in CFA Institute. She had the CFA designation up until then. She has decided to go back to work and puts the following statement on her resume: “I earned the CFA designation 10 years ago.” Is this a violation of Standard VII(B)?

A) Yes, she has used the letters "CFA" in an undignified manner.

B) Yes, because she uses "CFA" as a noun.

C) No, as long as she does not indicate she currently has the designation.

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Stades is allowed to state that she earned the designation as long as she does not infer that she currently has the designation. The letters “CFA” are only to be used as an adjective, and she does that.