- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 71. Guidance for Standards I-VII
- Subject 14. Standard IV (C) Responsibilities of Supervisors
CFA Practice Question
Maria is a portfolio manager for an investment advisory firm. Maria delegates some of her supervisory duties to Roger, CFA, after educating Roger on methods to prevent and detect violations of the firm's compliance procedures. Despite these efforts, Maria discovers that an employee reporting to Roger may have violated the procedures. According to the Standards of Practice Handbook, Maria's least likely initial course of action must be to ______.
A. increase supervision of Roger
B. initiate an investigation to determine the extent of the wrongdoing
C. suspend the employee
Explanation: A supervisor may delegate supervisory responsibilities, but such delegation does not relieve him or her of supervisory responsibility. Once a violation is discovered, a supervisor should respond promptly, conduct a thorough investigation of the activities to determine the scope of the wrongdoing, and increase supervision or place appropriate limitations on the wrongdoer pending the outcome of the investigation.
User Contributed Comments 7
| User | Comment |
|---|---|
| jj122 | Why is she placing increased supervision on Roger, when it is his employee that is the one doing wrong? |
| rbernier09 | I believe because she gives Roger, CFA supervisory power and he was negligent in his duties. |
| rlabog | I agree with jj122, the explanation also says to increase supervision on the wrongdoer which was NOT Roger. Even if Roger was considered the supervisor, the usual response is to make changes to the policy unless it state that Roger missed the employee's behavior because he was not fulfilling his supervisory duty. |
| kljack | May have. It is not certain. |
| kljack | therefore Maria would not fire the employee |
| prajktaw | I think B should be a correct answer here. It is written that the employee reporting to Roger MAY HAVE violated the procedures. It doesn't mean he definitely has violated it. Without knowing the extent of wrongdoing or assuring the wrongdoing how can she fire an employee? |
| agogoi | "least likely" to suspend employee |