Question #12
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: 5
Status: Correct
Correct Answer: B
Question
Deloris Johnson, CFA, observed that her supervisor has violated a federal securities regulation. Johnson discussed the matter with her company's compliance department but they have taken no action. According to the CFA Institute Code and Standards of Professional Conduct, Johnson is required to:
Answer Choices:
A. report the violation to securities regulators
B. confront the supervisor and attempt to stop the violation
Explanation
Johnson must dissociate herself from her supervisor's activity, for example by asking to be
reassigned. The Code and Standards do not require Johnson to report the violation to
governmental or regulatory organizations unless doing so is required by applicable law.
Johnson has attempted to stop the violation by discussing it with her compliance
department. She is not required by the Code and Standards to confront the supervisor.
(Module 42.1, LOS 42: I(A))