1215

All of the following are required for a CFA Institute member to maintain his or her active status EXCEPT:

A) remit a completed Professional Conduct Statement on an annual basis.

B) paying membership dues to CFA Institute on an annual basis.

C) Passing each exam in no more than two tries.

---

Passing each exam in two or fewer tries is not required to maintain active status as a member of the CFA Institute. CFA Institute imposes both of the other choices.

1215

All of the following statements in promotion of your services are in violation of CFA Institute Standards of Practice handbook EXCEPT:

A) I guarantee under my management that you will receive returns in excess of the market index average.

B) I passed Level II of the CFA Program in 2003.

C) based upon my research, you will achieve a 20% compound annual rate of return on small cap stocks over the next 5 years.

---

Candidates may refer to the CFA level(s) passed and the associated dates as long as a partial designation is not implied. They may not guarantee or promise a given level of return.

1215

Robert Hopkins has earned the right to use the CFA designation and wants to indicate this on his business card. According to CFA Institute Standards of Professional Conduct, which of the following is the proper use of the professional designation on his business card?

A) Robert Hopkins, cfa

B) Robert Hopkins, CFA Charterholder

C) Robert Hopkins, C.F.A.

---

The CFA designation should always be capitalized and shown without periods. The CFA designation should not be referred to as a degree. Placing the designation "CFA" or "CFA Charterholder" after one's name on a resume, business card, brochure, or other published material is appropriate.

1215

Judy Albert and Bob Tye, who recently started their own investment advisory business, plan to take the Level III CFA examination next year. Albert's business card reads, "Judy Albert, CFA Candidate." Tye has not put anything about the CFA on his business card. However, the firm's promotional materials describe the CFA requirements and indicate that Tye participates in the CFA program and has completed Levels I and II. According to CFA Institute Standards of Professional Conduct:

A) Albert has violated the Standards but Tye has not.

B) Both Albert and Tye have violated the Standards.

C) Neither Albert nor Tye has violated the Standards.

---

On letterheads and business cards and in directory listings, only the mark CFA or the words Chartered Financial Analyst should appear after the charterholder's name.

1215

John Johnson, portfolio manager at Sunshine Investments, has passed all three levels of the CFA? Program and has completed his work experience requirements. He expects to receive his charter in the near future. He includes the following statement in his firm’s brochure: “Johnson has passed all three levels of the exam and has completed the required work experience for the CFA Charter. He is eligible for the CFA Charter and expects to receive the charter in the near future. Over the years, he has demonstrated a superior performance and his CFA Charter will be rightfully awarded.” Johnson has:

A) violated CFA Institute Standards of Professional Conduct because he advertised the CFA Charter before actually obtaining it.

B) not violated CFA Institute Standards of Professional Conduct because he met all disclosure requirements.

C) violated CFA Institute Standards of Professional Conduct because he implied superior performance that would be linked to the CFA Charter.

---

According to Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, Johnson may indicate that he has completed the requirements and is eligible for the CFA charter along with an accurate explanation of the requirements. However, he may not imply that the designation would mean superior performance capabilities.

1215

A CFA Institute member puts the following statement on her resume: “I passed each level of the CFA exam on the first try.” Is this a violation of Standard VII(B)?

A) Yes, because she incorrectly refers to the CFA exam.

B) No, because it is a statement of fact.

C) Yes, because saying she passed exams on the first try is not appropriate.

---

The statement is not a violation because it is a fact. However, the member must not go on to claim superior performance.

1215

Ted Willis received his CFA designation in 1998 and was employed as an investment counselor until 2003.  During the past several years, Willis has been out of work because of a serious illness.  He also failed to pay his annual CFA Institute dues during the current year.  Willis has now recovered and accepted a position with an investment advisory firm.  His new business card says, “Ted Willis, CFA.”  As part of his job with his new firm, Willis uses PowerPoint? to make presentations to groups of prospective clients.  He obtained some of these PowerPoint? slides from web sites, but removed the copyright notice before showing the slides to prospective clients.

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 most accurate? Willis:

A) violated Standard VII(B) but he did not violate Standard I(C).

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

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

---

Willis violated Standard VII(B) because his right to use the CFA designation was suspended when he stopped paying CFA Institute dues. Thus, he can no longer use the CFA designation on his business card. Willis also violated Standard I(C) because he was guilty of plagiarism. He inappropriately used copyrighted material, which provided the impression that such material was his own.

1215

When Wes Smith first joined Advisors, Inc., he was excited that all the analysts at the firm had the CFA designation. In letters to prospective clients, he states that this ensures that Advisors can provide better service than their competitors. With respect to Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, this is:

A) a violation because he mentions the CFA designation in the letter.

B) a violation because he cannot guarantee better service.

C) a violation for both mentioning the CFA designation and saying the firm can guarantee better service.

---

According to Standard VII(B), the analyst cannot guarantee better service. Smith can mention the fact that all analysts have the designation, but he is limited in what he can say with respect to this fact. He could say, for example, that this means the analysts all had to take and pass three rigorous exams.

1215

All of the following situations violate Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, EXCEPT:

A) Karen Wright received her CFA charter in 1980. In 2001, she stopped paying her annual CFA Institute dues. During her retirement speech in 2002, Wright said, "Although I am no longer an active CFA charterholder, I was awarded the right to use the CFA designation in 1980 and maintained active membership in CFA Institute for 20 years."

B) Barney Latrell, when introducing himself to a prospective client, says, "I completed my CFA in 1995, which required passing three six-hour examinations over a three year period."

C) John Cabell has satisfied all the requirements imposed by CFA Institute for the right to use the Chartered Financial Analyst designation. His business cards say: John Cabell, C.F.A.

---

Wright’s statement did not violate Standard VII(B). Her right to use the CFA designation was suspended when she stopped paying dues but her statement is a matter of fact. Cabell’s violated Standard VII(B) because he improperly used the CFA designation on his business card. Proper usage of the CFA designation on his business card would be: John Cabell, CFA or John Cabell, Chartered Financial Analyst. Latrell violated Standard VII(B) by using the CFA designation as a noun. The CFA mark must be used as an adjective. Latrell could have stated, “I was awarded the CFA charter in 1995.”

1215

An analyst has not paid his CFA Institute dues for several years but has filed a professional conduct statement annually. Which of the following statements is CORRECT regarding his status with CFA Institute? The analyst:

A) cannot refer to ever having been a member.

B) is still an active member.

C) is no longer an active member.

---

Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, applies. In order to use the CFA designation, the member must pay annual dues and submit a yearly Professional Conduct Statement.