Reading 2-I: Standards of Professional Conduct & Guidan

class, decided, position

Q28. Allen Parsons, a CFA candidate, suspects a colleague at his firm of engaging in an illegal activity. Which of the following statements about procedures for compliance involving Standard I(A), Knowledge of the law is FALSE? Parsons:

A) is required to report this legal violation to the appropriate governmental or regulatory organizations.

B) should urge his firm to attempt to persuade the perpetrator to cease such conduct.

C) should consult counsel to determine whether the conduct is, in fact, illegal.

Q29. Mary Kim practices in the economically advanced country of Oldasia as well as in the emerging market country of Newasia. By regulation, Oldasia prohibits licensed investment advisors from trading in securities ahead of their clients. Newasia has no laws or regulations in this area. According to the CFA Institute Standards of Professional Conduct, Kim may:

A) not trade ahead of her clients in either country.

B) trade ahead of her clients in Newasia only.

C) trade simultaneously with her clients in Newasia only, as long as she has made full disclosure to her clients that she reserves the right to do this.

Q30. The CFA Institute Standards of Practice Handbook requires CFA Institute members to do all the following EXCEPT:

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

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

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

Q31. A CFA Institute member works for Secure Securities, Inc., and plays rugby on the firm’s rugby team. Secure Securities’ team recently played the team of a rival firm. During the game, a fight broke out and the CFA Institute member was the instigator, but no one was seriously hurt. Is this a violation of I(A) concerning maintaining knowledge and complying with laws, rules, and regulations?

A) No, because a fight at a rugby game is not a professional activity.

B) Yes, because the member is bound by the Code of Ethics.

C) Yes, because the member could have hurt someone in the fight.