CFA Practice Question

There are 361 practice questions for this study session.

Tyler Lepire, CFA, deputy treasurer for City College, manages the Student Scholarship Trust. Lepire issued a Request for Proposal (RFP) for domestic equity managers. Peter Throughgood, CFA, a good friend of Lepire, introduces him to representatives from Capital Investments, who submitted a proposal. Lepire selected Capital as a manager based on the firm's excellent performance record. Shortly after the selection, Throughgood, who had outstanding performance as an equity manager with another firm, accepted a lucrative job with Capital. Which of the CFA Charterholders violated CFA Institute Standards of Professional Conduct?

A. Both violated the Standards.
B. Throughgood violated the Standards.
C. Neither violated Standards.
Correct Answer: C

Members should use reasonable care and judgment to maintain independence and objectivity. There is no indication of inappropriate behavior in selection of the equity manager or in the acceptance of employment with that manager; both decisions were based on the excellent performance records of the manager and the member, respectively.

User Contributed Comments 5

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salexcfa

I find this a violation of I(B). CFA members/candidates have an important job in not just avoiding conflicts of interest situations but even appearances of conflicts of interest.
Yes, there is no specific mention of an arrangement Peter had with Capital such that Capital would offer him a job if he brought them business.
But in the real world, accepting a position like was done in the vignette would raise eyebrows of a CFA purist.

ascruggs92

^^^100% agree. I don't think anyone can objectively say that this wouldn't seem shady if it happened in real life.

gerdvar

I hear you, but it seems sometimes you are safer analysing solely the statement and the info provided. Also, avoid overreaching to a "real life situation" where a lot more variables could enter into consideration.

akalimugog

Was tempted to say both violated. But after reviewing the correct answer, I am convinced about it. Its important to look out for cues like "based on the firms excellent performance record..."

tomaney

I thought it was shady that Throughgood introduced firm to a competitor, then took a job with them after they got the work..