ethics - more/less strict law law, applies, country, always

OmarAdnan

Is this an error? On page 20 of CFAI II volume 1, in exhibit 1, it says:
“Member resides in LS [less strict] country, does business in MS [more strict] country; LS law applies”
This seems wrong - shouldn’t the more strict law always apply (unless the more strict law states that the less strict law should apply in certain cases)?

cross-ied

Take a look at it again. Are you sure you’re not glancing back and forth between the 3rd and 4th row?
3rd row says:
“Member resides in LS country, does business in NSL country; LS law applies.
4th row says:
“Member resides in LS country, does business in MS country; MS law applies.”
Both of these are correct statements. I do not see the quote you’ve posted except in the last row on the page, but it states in that example that the law of locality where business is conducted governs.

dvilayphet

Yes, I do mean the last row.
I don’t have a problem with MS law governing, as it seems to me unless the MS law explicitly points to the LS law then it should automatically govern (being stricter).
My problem is with the logical sequence - after the semi-colon it says “LS law applies”, then goes on to qualify it (as if the MS law only ultimately applies because LS law has pointed to it).
Even if LS law, for example, in this case were silent on the law of locality of business governing, shouldn’t MS law apply anyway by default? The way it is written suggests (wrongly?) that LS law would apply but for the proviso it contains.
And my understanding is that MS law always applies, unless it “excuses” itself.
I hope this is clear, because for some reason I’m finding it tough to explain!

karoliukas

That reading doesn’t really change year over year or level over level. If you have any questions on whether there is a mistake, you can (a) compare it to your L1 book and/or (b) seek out the errata from the CFAI.

Zesty

^^ That’s certainly understandable. I’d imagine that it might be difficult to find a lot of answers right now. I think the majority of candidates have decided to wait a little bit longer to crack the books.
EDIT: Let us know what you find out. Good luck.

malbec

do not see anything wrong with the statement.
Read the full statement:
Member resides in LS country, does business in MS country; LS law applies,
but it states that law of locality where business is conducted governs.
Duties:
Member must adhere to the law of MS country.
Explanation:
Because applicable law of the locality where the business is conducted governs and local
law is stricter than the Code and Standards, the member must adhere to the more strict
applicable law.

Nishant1

cpk123, the problem, if there is one, is not with the conclusion. If you just zero in on “LS law applies” you’ll see what I mean - I simply don’t get why at that point in the sequence it is LS and not MS law applying.
So to understand my point you need to forget the final conclusion, and even ignore the LS law’s proviso (that business locality law applies).
I could ignore this seemingly trivial/pedantic point, but it has left me with the uneasy feeling that I’ve missed the whole point of the section…