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Ethical And Professional Standards - Ethical And Professional Standards Section 2

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21. Zion mutual fund advertises in its marketing brochures that all the fund managers at Zion are CFA charterholders, and hence achieve better performance results. Which CFA Institute Standard of Professional Conduct is most likely violated?

  • Option : A
  • Explanation : There is improper reference to the CFA Designation that the charter holders achieve better performance results. Refer to Standard VII(B).
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22. Ann Haley posts on her Twitter account that her Level III of the CFA exam went very well. She further adds that although the exam was difficult and very tiring she still managed to do fairly well by effectively managing time. Has Haley violated any Standard?

  • Option : A
  • Explanation : Haley did not violate Standard VII(A) Responsibilities as a CFA Institute Member or CFA Candidate.
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23. Signa is a local wealth management firm that mostly employs either CFA charterholders or candidates in the CFA Program as its employees. Hence it uses the name Signa, Chartered Financial Analysts, Inc. as the firm‟s name. Which Standard did Signa most likely violate?

  • Option : A
  • Explanation : Signa has violated Standard VII(B) Reference to the CFA Designation by using it inappropriately as the company’s name.The designation is only meant for individuals and must not be used as a firm’s name.
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24. Shiraz Ahmed is a trader at an investment management firm. He is also involved in the buy-side trades of an aggressive equity fund managed by the firm. During a recent decline in the market many securities of the aggressive equity fund show a marked decline in value, but the performance of the fund does not show a change in return. Ahmed at once mentions it to his supervisor and the compliance officer, who tell him that the fund is doing well and he should concentrate on his job at the trading desk instead of asking irrelevant questions. The CFA Institute Standard that is least likely violated is:

  • Option : C
  • Explanation : According to Standard IV(C) Responsibilities of Supervisors, the supervisor and the compliance officer have the responsibility to investigate Ahmed’s concerns. Also see Standard I(D) Misconduct.
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25. Chang Li is head of sales at an investment bank. Li while reviewing the marketing material of the bank realizes that some of the information contained there-in is out of date. The marketing material is generated from the results provided by the bank‟s mutual funds and Li has no control over it. He continues to provide the material to his sales team without updates. Did Li violate any Standard?

  • Option : A
  • Explanation : Li has violated Standard I(C) Misrepresentation by presenting out-of-date information to clients.
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Ethical And Professional Standards Section 2