Question #5 - Reading 42.2 Standards of Professional Conduct Guidance for Standards II

Reading: Reading 42.2 Standards of Professional Conduct Guidance for Standards II

PDF File: Reading 42.2 Standards of Professional Conduct Guidance for Standards II.pdf

Page: 3

Status: Incorrect

Correct Answer: B

Your Answer: C

Shared Context

of 39 Chuck Thomas is the trustee of a trust of which Jill Wyatt is the main beneficiary. Wyatt's husband is the president of a company. In emptying the recycling bin at home, Wyatt finds some papers that lead her to believe that her husband's company will make a tender offer to acquire another firm. Wyatt takes the information to Thomas, who uses it to purchase shares of the company for the trust, but does not further disclose the information. Thomas has: A) not violated any Standards. B) violated the Standards concerning material nonpublic information. C) violated the Standards concerning loyalty, prudence, and care. Hunter Harrison, CFA, is president and chief investment officer (CIO) of Ironclad Investments, an investment adviser and pension consultant for medium and large corporate pension clients. Ironclad recently hired a compliance officer to update its compliance manual, which follows the CFA Institute Code and Standards. Harrison serves as a director on several non-profit and corporate boards of directors, some of which have their pension assets managed by Ironclad. Harrison oversees Ironclad's research analysts and portfolio managers, including Michelle Myers, who passed Level II of the CFA examination last year and plans to sign up for next year's Level III exam as soon as registration opens. Myers is a portfolio manager who regularly meets with clients and prospects. Myers is also a partner in a software company that sells retirement and benefit administration services to institutional clients, some of which are also clients of Ironclad. During her correspondence with prospects and clients, Myers includes reference to her status as a "Level III CFA candidate" in her biographical background to increase her prominence in the industry.

Question

Regarding Myers' references of her status as a candidate in the CFA program, what Standard governs these actions and is she in compliance?

Answer Choices:

A. Standard VII: Responsibilities as a CFA Member or CFA Candidate. Compliance: No

B. Standard I: Professionalism. Compliance: No

C. Standard III: Duties to Clients. Compliance: No

Explanation

The actions of Myers are covered under Standard (VII)—Responsibilities as a CFA Member or CFA Candidate. Standard VII(B)—Reference to CFA Institute, the CFA designation, and the CFA Program requires that CFA candidates appropriately reference their participation in the CFA program, clearly stating their candidate status and not implying the achievement of any type of partial designation. Importantly, to be considered a candidate an individual must be registered to take the next scheduled exam. (Module 42.3, LOS 42: II(A))

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