- CFA Exams
- CFA Exam: Dec. 2020 Level 1
- Study Session 1. Ethical and Professional Standards
- Reading 3. Guidance for Standards I-VII
- Subject 1. Standard I (A) Knowledge of the Law
CFA Practice Question
There are 361 practice questions for this study session.
A. He should report this discovery to his supervisor.
B. He should do nothing, since it's not his department.
C. He should encourage John to stop.
User Contributed Comments 15You need to log in first to add your comment.
How about C?
CFA material, Reading 2, p. 14: "...The first step should be to attempt to stop the behavior by bringing it to the attention of the employer through a supervisor or the compliance department. Members and candidates may consider directly confronting the person or persons committing the violation. If these attempts are unsuccessful, then members and candidates have a responsibility to step away and dissociate from the activity by taking such steps as removing their name from written reports or recommendations or asking for a different assignment."
--> "...may consider..." means that there is no obligation for Arthur to encourage John to stop. Thus not C.
Thank you for the explanation 0is4eva. Is that explanation from the Ethics Handbook ?
I would inform the FBI and put Fox Mulder on the case
The truth is out there
Very well pointed out -> "may consider" by "0is4eva". Thanks!!!
How about ask John for some hot tips so he can trade in his own account?
If I'm remembering correctly, the Standards said "the analyst can try and ask the co-worker to stop the action" but I think telling the supervisor is better, that way the analyst won't be accused of collusion. IMO...
nice to point out "may consider "="no obligation ", 0is4eva
Oh, and "the Mulder" version was also good :)
that was a tricky one! i was sure you have to confront the ill-doer in the first place! :)
Very nicely explained by ois4eva
maybe "confronting directly" apply to the situations where the member/candidate has partial responsibility in the wrong-doing?
Things get complicated if John is a relative or a very good friend of yours. What do you do then? I think most will say confront him first rather than immediately reporting to the supervisor. Never say close one eye and leave it. Better you than somebody else reporting him.