Question #2
Reading: Reading 42.3 Standards of Professional Conduct Guidance for Standards III
PDF File: Reading 42.3 Standards of Professional Conduct Guidance for Standards III.pdf
Page: 1
Status: Correct
Correct Answer: A
Question
Albert Long, CFA, manages portfolios of high-net-worth individuals for HKB Corp. One of his close friends, who heads a local charity for homeless children, asks Long to give her a partial list of his clients so that she can contact them to make tax-deductible donations. Because Long knows that the charity provides much benefit to the community, he provides the requested list. Betty Short, CFA, also works for HKB Corp. She receives a letter from CFA Institute's Professional Conduct Program (PCP) requesting that she provide information about one of HKB's clients who is being investigated. Short complies with the request despite the confidential nature of the information requested by the PCP. With regard to Standard III(E) Preservation of Confidentiality:
Answer Choices:
A. Both Long and Short violated the Standard
B. Long violated the Standard but Short did not
C. Short violated the Standard but Long did not
Explanation
Long violated Standard III(E) Preservation of Confidentiality because he did not preserve
the confidentiality of information communicated by clients. Short did not violate Standard
III(E) because this standard does not prevent members from cooperating with an
investigation by CFA Institute's Professional Conduct Program. Thus, Short can forward
confidential information to the PCP.
(Module 42.6, LOS 42: III(E))