Reading 2-VII: Standards of Professional Conduct & Guidan 2011, following, likely, center, least

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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.

 

 

Which of the following is least likely an appropriate use of the CFA designation?

A) Jeremy Salyers, as a CFA charterholder, expects to outperform the market because CFA charterholders have on average outperformed their peers.

B) Jeremy Salyers, CFA.

C) Jeremy Salyers has earned the CFA designation by passing three exams, all three on his first attempts.

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Members may not over-promise their performance as CFA charterholders. They may follow their name with the designation and describe, factually, the requirements for becoming a charterholder.

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

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

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

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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.

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Which of the following statements is a violation of Standard VII(B) if it is included on a CFA charterholder’s resume?

A) My earning the CFA designation indicates my superior ability.

B) Both of these are violations of Standard VII(B).

C) My earning the CFA designation indicates my desire to maintain high standards.

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A CFA charterholder may not make claims about how earning the designation proves superior capabilities. Saying "my earning the CFA designation indicates my desire to maintain high standards" is allowed because it is a factual statement

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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.

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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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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.”

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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.