- CFA Exams
- CFA Level I Exam
- Study Session 1. Ethical and Professional Standards
- Reading 3. Guidance for Standards I-VII
- Subject 12. Standard IV (A) Loyalty
CFA Practice Question
There are 361 practice questions for this study session.
CFA Practice Question
A CFA candidate was responsible for developing presentations regarding New Vision Asset Managers' investment process and historical investment performance. When the candidate moved to another firm, he brought with him the presentation he developed for New Vision, changed the name of the company, and presented it to a client of his new employer. The client asked the candidate if he had New Vision's permission to use their presentation. The candidate responded, "I created the presentation in my last month working there. It was after my resignation, so it's mine to use. Besides, the investment performance is what I achieved for my clients at New Vision." According to the Standards of Practice Handbook, the CFA candidate is least likely to have violated the CFA Institute Standards of Professional Conduct that relate to ______.
C. Communication with Clients and Prospective Clients
Explanation: It is not evident that the candidate did not disclose the basic format and general principles of the investment processes, use reasonable judgment in identifying which factors are import to his investment recommendations, or distinguish between fact and opinion. However, it is evident that the candidate did violate Standard IV (A) Loyalty, - Duties to Employers as the candidate did not act for the benefit of either his former or current employer, since the candidate could perceivably have caused harm to both by removing an asset from his former employer and using it at his new employer (which reflects badly on the new employer). In addition, the candidate implied that the performance at New Vision was the performance of his new employer, which is a misrepresentation (Standard I (C) Professionalism, Misrepresentation) of his new employer's historical investment performance.
User Contributed Comments 2
|MonuPanda||why communication with clients and prospective clients is the answer? Here because since the client asked a question she has disclosed all the stuffs. She didn't do it voluntarily so we can say she was not communicating to clients willingly.|
|dhill91||It's a tricky question but if you look carefully the questions ask for which standard the candidate "least likely" to have violated.|