Question #19
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: 8
Status: Correct
Correct Answer: B
Question
Which of the following statements about the CFA Institute Code and Standards is most accurate? The Code and Standards:
Answer Choices:
A. do not require that members report legal violations to the appropriate governmental or regulatory organization
B. require members to persuade the perpetrator to cease illegal activities
C. prohibit members from accepting gifts that create a conflict with their employer's interest
Explanation
The Code and Standards do not require members to report violations to legal authorities,
but such disclosure may be prudent or required in certain circumstances. They do not
require members to quit their jobs or to persuade violators to cease illegal activities. They
do require that members report the activities to the appropriate person(s) in their own
firm and disassociate themselves from the illegal actions. Members must obtain written
permission to accept gifts that create a conflict with their employer's interest.
(Module 42.1, LOS 42: I(A))