Question #13
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: 6
Status: Incorrect
Correct Answer: B
Your Answer: A
Question
The Securities and Exchange Board of India (SEBI) has just enacted a new stock-trading rule. SEBI will give brokers a 10-day grace period, during which violators of the rule will be immediately notified and given a chance to remedy their situation to comply with the new rule. If a CFA Institute member located in India or doing business in India unknowingly violates the rule and then remedies the situation within the 10-day grace period, has the member violated Standard I(A)?
Answer Choices:
A. No, because the member remedied the situation
B. Yes, because the member did not maintain knowledge and know of the rule
C. No, because the member unknowingly broke the rule
Explanation
Standard I(A) explicitly says that a member shall maintain knowledge and comply with
laws, rules, and regulations. By not knowing of the rule, the member broke the standard.
(Module 42.1, LOS 42: I(A))