Question #42
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: 17
Status: Correct
Correct Answer: A
Question
Georgia Jones, CFA, is an analyst for Johnson, Thomas & Co. She also serves as an outside director for Dewey Manufacturing, Inc. In the course of her duties, she begins to believe that Dewey's income statement for the most recent period may have been misstated. Georgia should do all of the following EXCEPT:
Answer Choices:
A. inform the Securities and Exchange Commission
B. consult with Johnson, Thomas' legal counsel
C. consult with Dewey Manufacturing's legal counsel
Explanation
Jones must pursue her concerns about a possible misstatement, because, if material, it
may be misleading to investors. Consistent with Standard I(A), Jones must not knowingly
participate or assist in a regulatory violation. As long as her concerns exist, she must not
validate any financial statements by voting to approve them. In addition she should seek
competent legal counsel both at her own firm and at Dewey Manufacturing. She should
not go to regulatory bodies until she has more certainty about the possible misstatement
and has received counsel that she should proceed.
(Module 42.1, LOS 42: I(A))