CFA Practice Question
John Hargrove lives in London and works with various clients in Europe. A number of his clients are in central Europe, where securities laws are being written but have not caught up with the rest of the European Union and UK. UK laws pertaining to many transactions are stricter than EU laws. While on a visit to Germany, he is asked to work with a subsidiary of his German client, in Romania. John's UK office does not have a direct relationship with Romania. Which of the following statements regarding appropriate laws and standards apply to John's engagement with the Romanian subsidiary? He must follow the ______.
A. stricter of UK and Romanian laws
B. stricter of EU laws and CFAI Code and Standards
C. stricter of Romanian laws and CFAI Code and Standards
Explanation: Since John's primary client is the German company, he is bound by the stricter of EU laws and CFAI Code and Standards. UK laws do not apply since the work is being performed in Germany. The key is to determine which country's laws govern a transaction or an engagement and then apply the stricter of that country's laws and the CFAI Code and Standards.
User Contributed Comments 11
| User | Comment |
|---|---|
| orchid | he LIVES in london, but WORKS around Europe |
| jliu0208 | The key is to determine which country's laws govern a transaction or an engagement and then apply the stricter of that country's laws and the CFA1 code and standards |
| patsy | Btw Romania is now a member of the European Union anyway. |
| dcfa | why not C ? |
| ninad123 | If a member or candidate lives or works in a foreign country, or works for foreign firms outside of his or her own country, he or she should comply with the strictest of his/her country's law, the foreign country's law, and the Code and Standards., The strictest is UK Law, so that has to be followed, what say? |
| hoyleng | he lives in UK but the co he works is in germany. so have to follow EU law. |
| Kaloyan | Romania is part of the EU. |
| Oksanata | he is asked to work with subsidiary of his german client in Romania, so actual company is situated in Romania, which could have strictest rules taking in account their explanations that securities laws are being written in Central European countries but have not caught up with those in EU and UK..So why not C? |
| siggarusfigs | It is a German Company with a subsidiary in Romania, so it must operate under German (EU) law? |
| santibanez | Really? No one of you -including A notes- have realised the UK is also part of the EU |
| santibanez | True, santibanez, but UK still has its own laws. EU is not a country. |