Question #1
Reading: Reading 42.1 Standards of Professional Conduct Guidance for Standards I
PDF File: Reading 42.1 Standards of Professional Conduct Guidance for Standards I.pdf
Page: 1
Status: Incorrect
Correct Answer: A
Your Answer: B
Question
Denise Weaver, CFA, manages a mutual fund and several pension plans. When Weaver receives a proxy for stock held by the mutual fund, she gives it to Susan Griffith, her administrative assistant, to vote according to the recommendations of the company's management. When the proxy is for a stock held by one of the pension plans, she asks Griffith to send the proxy on to the pension fund's sponsor to vote. Weaver has:
Answer Choices:
A. not violated the Standards with her policies on voting proxies
B. violated the Standards by her policy on mutual fund proxies, but not her policy on pension fund proxies
C. violated the Standards by her policy on mutual fund and pension fund proxies
Explanation
Guidance for Standard III(A) Loyalty, Prudence, and Care states that informed and
responsible voting of proxies is a responsibility of members and candidates. Neither of
Weaver's proxy voting policies meets this Standard. Proxies should not be voted blindly in
agreement with company management. Proxies for a pension plan should be voted in the
best interests of the beneficiaries, not the plan sponsor. The sponsor's interests will not
always be the same as the beneficiaries' interests.