CFA Practice Question

CFA Practice Question

Chan and Chung are two of the five Managing Directors of Alfalfa, a mid-size hedge fund. In a recent court case involving a securities lawsuit, Chan was called on to testify as an expert on securities research. During his testimony, Chan had to invoke several results from a proprietary research carried out by his staff at Alfalfa. He did so without specifically attributing the results to them. At around the same time, Chung had to meet with a few prospective clients for a business presentation. During this presentation, he showed them some of the results obtained by Chan's team, without specifically acknowledging the research team. Instead, he referred to them with phrases like, "our studies indicate that..." In this set of events, as it relates to Standard I(C) "Misrepresentation",
A. neither Chan nor Chung has violated the standard.
B. both Chan and Chung have violated the standard.
C. Chan has violated the standard while Chung has not.
Explanation: In the interactions with clients, senior management members represent the firm and as such, do not have to give specific attribution to research results obtained by employees of the firm. Hence, Chung has committed no violation. On the other hand, in the capacity of an expert, Chan is not representing the firm but himself. In such a case, he has to properly acknowledge the sources of all results he quotes.

User Contributed Comments 5

User Comment
isida presenting clients: no need to attribute source presenting yourself: must give sources
mark98007 Would it be okay to say "our studies" in court... or do you need to name names?
julescruis tough one
gazman1984 These ethics q's are badboys
SKIA gazman1984 - you can say that again, my worst section out of all the parts of this mock was ethics. unreal...
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