luckygiftvn

Martin Tripp, CFA, is vice-president of the equity department at Walker Financial, a large money management firm. Of the twenty analysts in his department for whom he has supervisory responsibility, eight are subject to CFA Institute Standards of Professional Conduct. Tripp believes that he cannot personally evaluate the conduct of the twenty analysts on a continuing basis. Therefore, he plans to delegate some of his supervisory duties to Sarah Green, who is subject to the Standards, and some to Bob Brown, who is not subject to the Standards. According to CFA Institute Standards of Professional Conduct, which of the following statements about Tripp's ability to delegate supervisory duties is most correct?

A) Tripp cannot delegate any of his supervisory duties to either Green or Brown.

B) Tripp can delegate some or all of his supervisory duties to Brown, even though Brown is not subject to the Standards.

C) Tripp can delegate some or all of his supervisory duties only to Green because she is subject to the Standards.

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Standard IV(C), Responsibilities of Supervisors, permits Tripp to delegate supervisory duties to Green, Brown, or both, but such delegation does not relieve Tripp of his supervisory responsibility.

torontoanalyst

Which of the following statements about Standard IV(C), Responsibilities of Supervisors, is NOT correct? CFA Institute members with supervisory authority:

A) may delegate supervisory duties, which relieves them of their supervisory authority.

B) are expected to bring an inadequate compliance system to the attention of the firm's senior managers and recommend corrective action.

C) are expected to have in-depth knowledge of the Code and Standards and to apply this knowledge in discharging their supervisory responsibilities.

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Standard IV(C) permits members to delegate supervisory duties but such delegation does not relieve members of their supervisory responsibility.

torontoanalyst

A manager has pointed out that his firm has experienced significant expansion over the past few years. Until recently, its Legal Department was responsible for the firm's compliance activities. Now, however, the legal and compliance functions have been separated. A compliance officer has been formally designated and a comprehensive compliance program has been put in place.In order to function effectively, the compliance officer must have the authority:

A) to affect, control, and guide employee behavior and to respond to employee misconduct.

B) to hire and fire personnel.

C) which is consistent with the most senior partner or executive officer in the firm.

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Compliance officers must be able to guide employee behavior and respond to employee misconduct, otherwise there will be no effective compliance procedures in place. Unless the compliance officer can effectuate compliance procedures, the compliance program has no chance of responding to or preventing violations of the Standards.

torontoanalyst

A firm recently hired Jill Taylor to be a managing supervisor in the firm. Taylor knows that all of her subordinate supervisors are members of CFA Institute and that they have a compliance system in place with respect to the Code and Standards. Under these conditions Taylor needs to:

A) review the compliance system for its adequacy.

B) neither of these choices.

C) rely on the current compliance system since the subordinate supervisors are subject to the Code and Standards.

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According to Standard IV(C), Responsibilities of Supervisors, Taylor must make reasonable efforts to detect violations of law, rules, regulations, and Code and Standards. This responsibility is not eliminated because the Taylor’s subordinates are CFA Charterholders. Taylor should review the compliance system and report any inadequacies to senior management.

torontoanalyst

According to Standard IV(C), a CFA Institute member who is in a supervisory role must have which of the following?

A) Both of these.

B) A graduate degree.

C) An in-depth knowledge of the Code and Standards.

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The only requirement for a supervisor is an in-depth knowledge of the Code and Standards. Neither of the other choices are required.

torontoanalyst

Karen Dalby, CFA, is a rising star at a major investment bank and has an extremely demanding schedule. To avoid "burning out" new hires, the bank has instituted a mandatory vacation policy which requires employees to take at least 5 days of vacation per year. At the end of the year, Dalby has taken no vacation, but is scheduled to travel to Fiji to take the mandatory 5 days. The bank’s most important client is suddenly targeted in a hostile takeover and asks specifically for Dalby to join the takeover defense team. Her supervisor, Hank Lone, CFA, asks Dalby to cancel her vacation and she complies. Lone is most likely:

A) not in violation of the Code and Standards.

B) in violation of Standard IV(A) "Loyalty."

C) in violation of Standard IV(C) "Responsibilities of Supervisors."

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Lone has a responsibility to equally enforce all firm policies to demonstrate that all rules are equally important.

torontoanalyst

For years John Berger, a CFA charterholder and CEO of a company, relied upon a set of reasonable procedures for preventing violations of the Code and Standards of Professional Conduct in the firm. To not be liable for a violation of the Standards, Berger must:

A) both periodically review the procedures and ensure the procedures are monitored and enforced.

B) do nothing more than have the set of procedures in place as stated.

C) ensure the procedures are monitored and enforced.

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As a CEO, Berger is responsible for implementing and maintaining appropriate compliance procedures. He must also ensure the procedures are monitored and enforced.

torontoanalyst

Dan Lee, CFA, is a portfolio manager with Jewel Investment Advisors. Doris Black, one of Lee's long-time clients, tells Lee that he can use her vacation home in Aspen, Colorado, for a week during skiing season if the return on her portfolio exceeds its benchmark by two percentage points during the next year. Black also offers to reimburse Lee and his wife for their transportation expenses to Aspen. Lee accepts this arrangement. According to CFA Institute Standards of Professional Conduct, what is Lee's obligation, if any, to disclose this arrangement to Jewel? Lee:

A) must disclose both the arrangement to use Black's vacation home and the reimbursement of expenses.

B) need not disclose either the arrangement to use Black's vacation home or the reimbursement of expenses.

C) must disclose in writing the arrangement to use Black's vacation home but not the reimbursement of expenses.

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Standard IV(B) Additional Compensation Arrangements requires that Lee disclose to Jewel in writing any extra monetary compensation or other benefits that he receives from outside the firm for his services.

torontoanalyst

An analyst needs to inform his supervisor in writing of which of the following?

A) An annual bonus, sent to the analyst by a client, which varies with the performance of the client's portfolio that the analyst manages as an employee even though no verbal or written agreement exists about the bonus.

B) A client and the analyst alternate paying for lunch at a local sandwich shop.

C) Both the lunch and the bonus mentioned in the other answers.

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Standard IV(B) requires that members disclose to their employer in writing all benefits that they receive in addition to their regular compensation for services they perform on behalf of their employer. Since the bonus varies with the performance of the client’s portfolio, there is a clear link to the services of the analyst. The analyst is not required to report the lunch since it is not linked to performance.

torontoanalyst

Jan Hirsh, CFA, is employed as manager of a college endowment fund. The college’s endowment is held by the brokerage firm Advisors, Inc. Over the years, Hirsh has developed a solid relationship with Advisors. Because of this relationship, Advisors has given her their Platinum level service for her personal account. Advisors ordinarily gives the Platinum level only to clients who do a minimum of $2,500 of commission business in a year. Hirsh has never reached the $2,500 commission level and probably will never do so. According to Standard IV(B), Additional Compensation Arrangements, Hirsh needs to:

A) inform her supervisor verbally about the Platinum account.

B) do none of the actions listed here.

C) inform her supervisor in writing about the Platinum account.

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Having the Platinum account is a benefit from her managing the endowment, which led to the relationship with Advisors. Members should report to their employers any additional compensation or benefits they receive for their services. This must be in writing. Doing $2,500 in business alone will not negate her obligation unless she explicitly tells Advisors that she is willing to accept whatever penalties accompany a Platinum account when a client does less business.