Question #27
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: 11
Status: Incorrect
Correct Answer: B
Your Answer: B
Question
A government committee has concluded that investment company fees should be disclosed to clients each quarter and has proposed new legislation to require this. Currently, the legal requirement is to report such data annually. In compliance with current legal requirements, Dolphin Investments discloses its fees annually. Eugene Shin, CFA, Dolphin's compliance officer, learns of the proposed changes but does not convert Dolphin's reporting to a quarterly basis. Shin's decision not to act:
Answer Choices:
A. constitutes professional misconduct as defined in the Code and Standards
B. is a violation of his duty to employer as defined in the Code and Standards
C. is not a violation of the Code and Standards
Explanation
The potential change in the law is only a proposal at this stage. There is no violation as
long as Dolphin is following the regulations currently in force.
(Module 42.1, LOS 42: I(A))