Reading - 2-I - LOS a: Q36-Q41

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

B)   take investment action based on this information for clients in both Country N and Country L and for himself.

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

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

The correct answer was  A)

Because applicable law states that the law of the locality where the business is conducted governs and local law is less strict than the Code and Standards, the member must adhere to the Code and Standards. Standard II(A) prohibits the use of material nonpublic information.

37、Maria Valdes, CFA, is an analyst for Venture Investments in the country of Newamerica, which has laws prohibiting the acceptance of any gift from a vendor if the gift exceeds US $250. Valdes has evidence that her Venture Investments colleague, Ernesto Martinez, CFA, has been receiving gifts from vendors in excess of US $250.

Valdes is obligated to:

A)   disassociate herself from the activity, and urge Venture to persuade Martinez to cease the activity.

B)   disassociate herself from the activity.

C)   disassociate herself from the activity, urge Venture to persuade Martinez to cease the activity, and inform CFA Institute of the violation.

D)   disassociate herself from the activity, urge Venture to persuade Martinez to cease the activity, and inform CFA Institute and regulatory authorities of the violation.

The correct answer was  A)  

Standard I(A), Knowledge of the Law requires members who have knowledge of colleagues engaging in illegal activities to disassociate from the activity and urge their firms to persuade the individual to cease such activity. Reporting to regulatory authorities may be prudent in certain circumstances, but is not required. Reporting to CFA Institute is not required.

38、Lawrence Kelly is the Chief Investment Officer at a money management company that claims it is in compliance with CFA Institute Soft Dollar Standards. For the first time, the company has purchased securities in the country of Santa Rosa. He learns that under Santa Rosen law, one of the company's soft dollar policies is forbidden, yet to conform with the law, Lawrence would have to violate the Soft Dollar Standards, but not the Standards of Professional Conduct. Lawrence:

A)   must follow the CFA Institute Soft Dollar Standards, informing the Santa Rosen regulators of his reasons.

B)   must follow the Santa Rosen Law and cease claiming compliance with CFA Institute Soft Dollar Standards.

C)   should follow the Santa Rosen Law and can still claim compliance with CFA Institute Soft Dollar Standards.

D)   must place all securities from Santa Rosa on its restricted list.

The correct answer was  C)  

In cases when the Soft Dollar Standards conflict with local law, managers should follow local law and are still in compliance with the Standards.

39、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 the vase but not the statue.

C)   permitted to accept the statue but not the vase.

D)   permitted to accept both gifts.

The correct answer was  A)

Under Standard I(A), Salvatore must, as a CFA charterholder, apply the CFA Institute Code and Standards or the controlling law, whichever is stricter. In this instance the stricter laws of Oldworld, where Salvatore is licensed, apply to prohibit the gifts, even though the gifts are offered in Newworld.

40、The CFA Institute Standards of Practice Handbook requires CFA Institute members to do all the following EXCEPT:

A)   to inform employer, clients, and potential clients of benefits received for recommending products or services.

B)   receive written permission from both their employer and outside clients to engage in investment consulting outside the firm.

C)   to disclose to their employer in writing all monetary compensation or benefits received for services performed in addition to their company compensation.

D)   to disclose in writing to the proper regulatory authority all observed violations of the securities laws and regulations.

The correct answer was  D)

Members are not required to report violations of others to regulatory authorities, either verbally or in writing, but such reporting may be prudent.

41、The SEC’s new stock-trading rule has just gone into effect. The SEC will give brokers a 10-day grace period, during which violators of the rule will be immediately notified and given a chance to remedy their situation to comply with the new rule. If a CFA Institute member unknowingly violates the rule and then remedies the situation within the 10-day grace period, has the member violated Standard I(A)?

A)   Yes, because breaking a rule of the SEC has no remedy for a member of CFA Institute.

B)   No, because the member remedied the situation.

C)   No, because the member unknowingly broke the rule.

D)   Yes, because the member did not maintain knowledge and know of the rule.

The correct answer was  D)  

Standard I(A) explicitly says that a member shall maintain knowledge and comply with laws, rules, and regulations. By not knowing of the rule, the member broke the standard. If a CFA Institute member accidentally breaks a rule from a careless error and remedies the situation, this would not be a violation of Standard I(A), and so the “no remedy” response is not correct.