jawz

Standard VI(C), Referral Fees, requires the member to do all of the following EXCEPT:

A) make required disclosures to the referred client before an agreement is made to provide services to the referred client.

B) disclose to the referred client how much the referral source was paid to refer the client.

C) disclose to the referred client the percentage of the member's business that comes from referrals.

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The applicable Standard, VI(C), does not require a member to disclose the percentage of their business that comes from referrals.
Standard VI(C) states, "Members shall disclose to clients and prospects any consideration or benefit received by the member or delivered to others for the recommendation of any services to the client or prospect." Appropriate disclosure means telling the client or prospect, before agreeing to perform services, of any benefit given or received for recommending the member’s services.

jawz

A member or candidate that receives consideration from others for the recommendation of products or services, must disclose the estimated dollar value of the consideration paid in:

A) cash or soft dollars only.

B) cash only.

C) cash, soft dollars, or in kind.

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According to Standard VI(C), Referral Fees, consideration includes all fees that are paid in cash, soft dollars, and in kind. Referral fees must be disclosed to the client or employer before engaging in an agreement to provide services.

jawz

Standard VI(C), Referral Fees, is applicable to:

A) only cash consideration received for the recommendation of products or services.

B) all consideration received or paid for the recommendation of products or services.

C) only consideration paid in soft dollars for the recommendation of products or services.

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According to Standard VI(C), Referral Fees, consideration includes all fees that are paid in cash, soft dollars, and in kind. Referral fees must be disclosed to the client or employer whether the consideration is received by or paid to others for the recommendation.

jawz

Joe James, CAIA, CPA, is a CFA Level II candidate living in Boston. In the course of his accounting practice, James often refers clients to a local law firm specializing in estate planning. James does not violate client confidentiality and does not receive compensation for the referral. However, the law firm often gives James tickets to the theater and major sporting events.

Which of the following statements regarding disclosure is CORRECT? James:

A) must disclose the benefits received for referring clients to the law firm.

B) need not disclose the benefits received for referring clients because no compensation is received.

C) need not disclose the benefits received for referring clients because the clients were developed in the course of his accounting practice.

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Standard VI(C), Referral Fees, requires members to disclose to clients and prospects any consideration or benefit received by the member or delivered to others for the recommendation of any services to a client or prospect. James has received a benefit (free tickets), which must be disclosed to the clients referred by James. Disclosure will allow the clients to determine any partiality of the recommendation.

jawz

Stephanie Orange, Level II CFA candidate, posts blogs for her exam study group three days after the exam to vent her frustrations over the exam. However, to avoid disclosing what was actually on the exam, she only discusses topic areas she thought would be on the exam that were not. She writes "...the topics selected were unnecessarily obscure. Important items like FCF, DDM, and Residual Income were ignored completely..." Orange is most likely:

A) in violation of Standard VII(A) "Conduct as Members and Candidates in the CFA Program" for providing confidential information about the exam.

B) not in violation as the information was only about what was NOT on the exam.

C) not in violation as the information about the actual exam contents was posted after the conclusion of the exam.

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Standard VII(A) "Conduct as Members and Candidates in the CFA Program" prohibits members and candidates from providing confidential information about the exam – even after the conclusion of the exam. Examples include broad topical areas tested or not tested.

jawz

Lindsay Gordon is a CFA Level II candidate living in San Francisco. Gordon’s best friend, Steve Haney, also a Level II candidate, is living in Munich. Because of the time difference between Munich and San Francisco, Gordon suggests that Haney call Gordon during the Munich exam lunch break to discuss the morning exam. Haney makes the call on exam day.

Which of the following statements regarding Gordon and Haney is CORRECT?

A) Both Gordon and Haney are in violation of Standard VII(A).

B) Gordon is in violation of Standard VII(A), but Haney is not in violation.

C) Neither Gordon nor Haney is in violation of Standard VII(A).

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Both Gordon and Haney violated Standard VII(A) by compromising the integrity of the exam. Gordon now has an unfair advantage.

jawz

All of the following are violations of Standard VII(A), Conduct as Members and Candidates in the CFA Program, EXCEPT:

A) disregarding the rules related to the administration of the CFA examination.

B) improperly using the CFA Designation to further professional goals.

C) expressing opinions in disagreement with CFA Institute advocacy positions.

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Members and Candidates are allowed to express their opinions about the CFA Institute and CFA Program without violation of any Standards. Both of the other choices are in direct violation of Standard VII(A).

jawz

For the past 5 years, Karen Beckworth, CFA, has served as a proctor for the CFA exam. Beckworth tells her assistant, a CFA Level III candidate, that she normally receives the examinations on the Thursday before the exam. Given the low pass rate at Level III, Beckworth asks her assistant if he would like an advance copy of the next exam. Beckworth’s assistant declines the offer.
Beckworth’s assistant has been very vocal about expressing his opinions about the low pass rate. The assistant claims, “there are too many charterholders and CFA Institute is deliberately failing candidates because the prestige of the CFA charter is becoming diluted.”
Which of the following statements concerning Beckworth’s and her assistant’s behavior is CORRECT?

A) Both Beckworth and her assistant are in violation of Standard VII(A).

B) Neither Beckworth nor her assistant is in violation of Standard VII(A).

C) Beckworth is in violation of Standard VII(A), but her assistant is not in violation.

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Beckworth is in violation of Standard VII(A), Conduct as Members and Candidates in the CFA Program. Beckworth compromised the integrity of the exam by offering her assistant an advance copy. Beckworth’s assistant is allowed to express his opinion without violation of any Standards.

jawz

Ron Vasquez is registered to sit for the CFA Level II exam. Unfortunately, Vasquez has failed the exam the past two years. In his frustration, Vasquez posted the following comment on a popular internet bulletin board: “I believe that CFA Institute is intentionally limiting the number of charterholders in order to increase its cash flow by continuing to fail candidates. Just look at the pass rates.”

Which of the following statements regarding Vasquez’s conduct is CORRECT? Vasquez is:

A) not in violation of Standard I(D), Misconduct or Standard VII(A), Conduct as Members and Candidates in the CFA Program.

B) in violation of Standard VII(A), Conduct as Members and Candidates in the CFA Program, but not in violation of Standard I(D), Misconduct.

C) in violation of both Standard I(D), Misconduct and Standard VII(A), Conduct as Members and Candidates in the CFA Program.

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Standard VII(A), Conduct as Members and Candidates in the CFA Program does not prohibit expressing opinions about the program or the CFA Institute. Thus, Vasquez is not in violation. Nothing in the facts indicates a violation of Standard I(D), Misconduct. Standard I(D) deals with professional conduct involving dishonesty, fraud, or deceit.

jawz

Which of the following actions would be a violation of the Standard VII(A), Conduct as Members and Candidates in the CFA Program?

A) Misrepresenting information on the Professional Conduct Statement.

B) Exaggerating the implications of holding the CFA designation.

C) Failure to submit a Professional Conduct Statement and pay annual dues.

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Misrepresenting information on the Professional Conduct Statement is a direct violation of Standard VII(A), Conduct as Members and Candidates in the CFA Program. The other choices are violations of Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program.