Question #35
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: 14
Status: Incorrect
Correct Answer: B
Your Answer: A
Question
Mary White, CFA, sits on the board of directors of XYZ Manufacturing, Inc. She discovers that management has knowingly participated in an activity she knows is illegal. According to the CFA Institute Standards of Professional Conduct, White is least likely to be required to:
Answer Choices:
A. seek legal advice to determine what actions should be taken
B. report the violation to the CFA Institute Professional Conduct Program
C. disassociate herself from the activity
Explanation
Members are encouraged -- but not required -- to report violations of others. Standard
I(A), Knowledge of the Law. Prohibition against knowingly practicing or assisting in
violation of laws, rules, and regulations. If White knows that someone has engaged in a
possible illegal activity, she should: (1) report the finding to the appropriate supervisory
person at her firm, (2) if the situation is not remedied, disassociate herself from the
situation, and (3) seek legal advice to see what other actions, such as notifying the proper
regulatory agency, should be taken.
(Module 42.1, LOS 42: I(A))