Question #23
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: 13
Status: Correct
Correct Answer: B
Question
Susan Nielsen, CFA, works for a rating agency which competes directly with S&P and Moody's. Her friend, Lance Parker, works for the same company but in a different department which is involved in advisory services for structured products. Nielsen frequently receives pressure from Parker to "put a positive face" on client ratings to help him sell advisory services. She is reluctant to discuss client ratings with Parker and tries to avoid the topic. She consults her company's compliance department and learns that there are no policies or procedures to discourage Nielsen and Parker from sharing information and is encouraged to consider his advice on company ratings. Nielsen should feel least obligated to:
Answer Choices:
A. advise regulators of the potential conflict of interest and seek legal counsel
B. advise her firm to develop firewalls
C. avoid talking with Parker about client ratings
Explanation
Nielsen should advise her firm to develop firewalls and protections to allow the different
departments to function independently. If Nielsen and Parker are going to remain friends,
they should stop talking about client ratings.