CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

A CFA charterholder is asked to review her firm's soft dollar practices. As part of the review, she notes that her firm has failed to disclose the practices to the firm's clients in writing as required by law. The charterholder quickly prepares and distributes the appropriate disclosures. She does not report the firm's violation to the appropriate regulatory authority. According to the Standards, by not reporting the violation to the regulatory authority, has the charterholder violated any CFA Institute Standards of Professional Conduct?
A. Yes, because she failed to act in the best interest of her employer.
B. Yes, because she is required to report legal violations to the appropriate authority.
C. No
Explanation: Although disclosure may be prudent in certain circumstances and required if mandated by applicable law, the Code and Standards do not require that members report legal violations to the appropriate governmental or regulatory organizations.

User Contributed Comments 5

User Comment
tomalot Nice cop-out. 15% of the exam on Ethics and ZERO obligation to report law-breaking.........
Inaganti6 @tomalot welcome to CFA land
gaurnaresh Working for your employer you report to the legal department and if that does not work then you can resign or approach law enforcement.
jlai1990 Isn't the legal team or counsel, appropriate authority?
joeclark maybe because she already drafted the required disclosure.
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