CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Judy, CFA, filed for personal bankruptcy two years ago after incurring large medical expenses. She was hired recently as a portfolio manager. According to the CFA Institute Standards, must Judy disclose her bankruptcy filing to her new employer?
A. Yes, because she has a duty of loyalty to her employer.
B. Yes, because bankruptcy represents a potential conflict of interest.
C. No
Explanation: Members who are involved in a personal bankruptcy filing are not automatically assumed to be in violation of the Standards because unless the bankruptcy involved fraudulent or deceitful business conduct, it may not reflect poorly on the integrity or trustworthiness of the person involved.

User Contributed Comments 7

User Comment
alexchav But it *could represent a conflict, no?
farhan92 this is actually a toughie given that every job i have ever applied for asked whether you have been made bankrupt. However, given the choices theres nothing to suggest conflict or question her loyalty.
ascruggs92 ^Interesting, because I have never applied to a job that asked about personal bankruptcy.
thebkr777 Most a jobs in Canada that require you to be handling large amounts of money/transactions do require this information.
renataa I came across a similar question in CFA website but that was about the candidate didnt mention at the new job interview that he was fired from his previous job and that was treated as MIsconduct and violation of the standard. I would assume bunkruptcy would be the same,,,
Swoods2 You have to have a very narrow focus on these - i.e. which standard is personal bankruptcy discussed under? It's talked about under misconduct, and not loyalty to employer. I suppose the question implies the bankruptcy does not involve misconduct, although I personally think there is frequently an element of deceit on the lender involved in personal bankruptcy.
Dilaraj You don't have to disclose it, unless you are asked by your employer/or internal rules. You don't even have to disclose that you were arrested for the actions that relate to matters of your personal believes (like human rights, antirasism... etc.) as long as in doesn't involve fraud, deceit or dishonesty.
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