- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 3. Guidance for Standards I-VII
- Subject 11. Standard III (E) Preservation of Confidentiality
CFA Practice Question
Based on Standard III (E) Preservation of Confidentiality, a financial analyst must preserve the confidentiality of information received from a client if which two of the following criteria are met?
II. Information must result from or be relevant to that portion of the client's business that is the subject of the special or confidential relationship.
III. The financial analyst must be in a relationship of trust with the client.
IV. Information could reasonably be expected to impair the analyst's ability to render unbiased and objective advice.
I. Information must be material and nonpublic.
II. Information must result from or be relevant to that portion of the client's business that is the subject of the special or confidential relationship.
III. The financial analyst must be in a relationship of trust with the client.
IV. Information could reasonably be expected to impair the analyst's ability to render unbiased and objective advice.
Correct Answer: II and III
User Contributed Comments 9
| User | Comment |
|---|---|
| danlan | Not I? |
| mtcfa | I deals with Material Non-Public Information: Standard II (A). |
| bobert | The reasoning behind why not I: If a client (including a company) has nonpublic information, it is the duty of the CFA M or C to disseminate that information, or push to have it disseminated, not keep it confidential. |
| midwest | I find that just by looking for key words, you can weed out the two wrong answers; answers I ("material, nonpublic") and IV ("unbiased, objective") aren't based on Standard III (E) |
| manny1 | The crux of confidentiality is a fiduciary/trust relationship |
| jpducros | About III, does that imply that if we don't have any relationship with a propect, we can disclose confidential (non-material) information freely...or even sell it (I'm being nasty here) ? |
| KarenMaciel | Good question!!! |
| nabilhjeily | if so u received it from another person who have violated the ethics i think...so you will be free to do whatever you want. no obligations here |
| raffrobb | This discussion of the question brings up the issue of prospective client/non-client confidentiality, regardless of who and now information was obtained. |