Ethical And Professional Standards MCQ - Ethical And Professional Standards Section 1

56 Ankit Aacharya, CFA, while making the marketing material for his firm Aakash Capital writes in the brochure, “Aakash Capital is committed to achieving excellent performance for its clients. It hires the most eligible personnel in the field of investment management. Most of the employees have either completed the CFA Program or are enrolled as candidates in the CFA Program. As a CFA charter holder, I am the most qualified to manage client investments.” Aacharya most likely violated the Standard with improper references to the:

CFA Institute and CFA Designation were improperly referenced. Refer to Standard VII(B) Reference to CFA Institute, the CFA Designation, and the CFA Program.

57 Rasmussen Hadley, CFA, writes in an independent blog about the findings of his research on various companies. He also works as an analyst with Brooklyn Brokers. He has written permission from his employer and appropriate regulator to give his opinion about various securities in his blog. Hadley, however, uses the pseudonym Sam Smith, CFA, to hide his identity on the internet. Does Hadley violate the Standards?

Hadley cannot use the CFA designation tagged to a pseudonym or online profile name used to hide his identity. He is free to use a pseudonym but without the CFA designation. Refer to Standard VII(B) Reference to CFA Institute, the CFA Designation, and the CFA Program.

58 Sylvia Lancaster, a CFA candidate, is hired by Trevor Securities as a junior analyst. James Brokovich is the director of research at Trevor and feels that Lancaster should cover equities in emerging markets because of their rapid growth. Lancaster reads various brokerage reports on the subject and talks to other analysts of the company. Brokovich also arranges for her to meet with an old friend, Bryan Lee, who is on the board of various East Asian companies. Lancaster is then asked to submit a report on the companies in the consumer durables industry of East Asia. Due to shortage of time, Lancaster finalizes her report based on her conversation with Lee and the brokerage reports, and gives her “buy” recommendations on Malaysian stocks from the consumer durables industry. Lancaster does not give reference of the brokerage reports as sources in her report. The Standard least likely violated by Lancaster is:

Lancaster has violated Standard I(C) Misrepresentation by not citing the brokerage reports as sources and Standard V(A) Diligence and Reasonable Basis because of her lack of independent research in the preparation of her report.

59 Greg Vladislav, CFA, works for Anatoli Securities as a portfolio manager. One of his clients Boris Vladmir has left the firm. Vladislav receives a request from a college friend who has recently started his money management firm to share information and records of clients who have left Anatoli recently. Vladislav feels that it will not be inappropriate to send him Vladmir‟s records. Vladislav has most likely violated the Standard of:

Vladislav has violated III(E) Preservation of Confidentiality because he has to maintain the confidentiality of client information even if the person or entity is no longer a client.

60 Lara Whitman, CFA, worked for Rapid Results Brokerage Company (RRBC) as a trader. She recently resigned her position as a trader to join another competing investment and brokerage firm. Whitman did not sign any non-compete agreement while at RRBC that would have prevented her from soliciting former clients. Whitman, however, had saved her client list and records while working at RRBC, in her personal computer at home as a second copy. She accesses this file to contact her former clients in her new job. The Standard most likely violated is:

Standard IV(A) Loyalty is most likely violated. A member cannot take records or work performed on behalf of the firm in paper copy or electronically without permission to another firm. In this case she cannot use the firm’s records of clients without the firm’s permission.