115 CFA
File: Reading 3 - Professionalism - I(C) Misrepresentation

Professionalism - I(C) Misrepresentation


a. demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations of issues involving issues of personal integrity

Flash cards

Is plagiarism a violation ofStandard I(C)?

In addition to the ethical and integrity concerns about plagiarism, why else is it a bad idea to copy others without attribution?
You might be using materials which are incorrect, bad advice, or misrepresentations, and expose yourself to future violations or credibility issues.

b. distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards

Flash cards

What is the primary directive of SoPC I. Professionalism, section (C) Misrepresentation?
Members and Candidates must not knowingly make any misrepresentations relating to investment analysis, recommendations, actions, or other professional activities.

What three types of statements does SoPC I(C) say should not be misrepresented?
1. The services that they or their firms are capable of performing.
2. Their qualifications or the qualifications of their firms.
3. Their academic or professional credentials.

What is a misrepresentation defined as?
A misrepresentation is any untrue statement of a fact, or any statement that is otherwise false or misleading.

What is the SoPC I(C) against misrepresentation trying to achieve?
This standard relates to misrepresentations by members about their qualifications and services, and it disallows any misleading guarantees about investments and their returns.

Members can't make guarantees regarding an investment, but what CAN they communicate about a potential investment?
Members may communicate accurate information regarding the terms of the investment instrument and the issuer's obligations under the instrument. If an investment has structured guaranteed returns, that can be communicated.

According to Standard I(C), under what circumstances can a member "guarantee" a potential investment?
If an investment has structured guaranteed returns, that can be communicated.
Under no circumstances can a member make a statement that an investment is "guaranteed," or that superior returns can be expected based on the member's past success.

Does it matter if a misrepresentation is publicly disseminated?
No. It's still a violation of the Standard even if the statement is never publicly disseminated.

What are the two notable exceptions about copying/using information which does not make it plagiarism?
The primary exception to blatant plagiarism is copying factual information, as published by several recognized financial institutions, as well as statistical information. The other exception is if an idea, methodology, etc, has been created by the firm you work for and you're speaking with clients and prospects.

Under which circumstance should copied content be attributed to the author?
Anytime you use content from another author which is not factual information already published by several recognized institutions, you should attribute the original author.

Should you always keep the source materials you used to prepare research reports?

c. recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct

Flash cards

What are two ways that members can prevent unintentional misrepresentations of the qualifications you or your firm are capable of performing?
1. You must understand the limit of your and the firms capabilities and be accurate in presentations.
2. You can make a resume of your qualifications and a list of services you're capable of performing to use in accurate presentations to clients.

What are two ways that firms can provide guidance about firm capabilities for employees who make presentations to clients?
1. The firm can make a list of available services and describe the firms qualifications and compensations.
2. The firm can specifically designate which employees are authorized to speak on behalf of the firm.

What are three steps to avoid plagiarism?
1. Maintain copies of all information used to generate a report
2. Attribute quotations other than recognized financial and statistical reporting services
3. Attribute summaries to the relevant author

Name five ways that a member can be in violation of Standard I(C) because of plagiarism:
1. Uses excerpts from reports done by others without acknowledgement.
2. Cites quotes attributable to "leading analysts" and "investment experts" without specific reference.
3. Uses charts and graphs without stating sources.
4. Copies computer spreadsheets without obtaining the permission of the owner(s).
5. Presents a firm's own research in an expert witness situation without attributing the research to its specific source.

Is it a violation of Standard I(C) when statistical forecasts are presented with attribution, but not the qualifying statements that may have been used by the originator?
This is a violation of I(C) because it could be a misrepresentation, though it does not seem to be plagiarism.

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