Professionalism - I(A) Knowledge of the Law

LOS

## 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

What level of conduct should you always aspire to? Why? The highest level of ethical conduct, because it assists members in avoiding legal and ethical traps and violations of the Code of Ethics

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

Flash cards

You are working as an analyst in a foreign country which does not prevent insider trading, and you receive insider information. What should you do? Do not use the insider info to make a trade because the Code and Standards are more strict and explicity forbid it

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

Flash cards

What is the primary directive of the SoPC I(A)? You must understand and comply with all applicable laws, rules, and regulations (including CFA) of any government, regulatory org, licensing agency, or professional association governing your professional activities.

In the event of conflict between CFA policy and laws, what is the appropriate action? You must comply with the more strict law, rule, or regulation.

When must a member or candidate dissociate? If a member is knowingly participating or assisting in a violation of laws, rules, or regulations.

In general members in all countries should comply with Code and Standards at all times. But why is the rule of thumb to always choose the stricter of Code and Standards vs. local regulation? Because laws in different countries may establish different standards.

If the laws in another country are tougher than the Code and Standards, which should you adhere to? Adhere to the laws because they are stricter

If there are no laws in another country, what should you do? Adhere to the Code and Standards

If a member lives in one country but works for/in another country, which laws should be adhered to? Adhere to the stricter of his laws, the foreign country’s laws, or the Code and Standards

If a member feels that a standard or law has been broken, what should he do? Seek advice of the firms counsel and only move forward if you feel that the counsel is both competent and unbiased.

If a member knows that a standard or law has been violated, what should he do? Report the incident to the appropriate supervisory person in the firm.

If a member knows that a standard or law has been violated, and it has already been reported to a supervisor but no action has been taken, what should he do? In this case, if you reported it to the supervisor and it still has not been remedied, you should dissociate from the situation and possibly seek legal advice to see if other actions should be taken.

If you know a violation has occurred, should you report it to the appropriate government or regulatory organzation, even if the law does not require you to? No, if the law does not require it, you don’t need to report it to the government or regulatory organization.

Is a member required to report a violation to the CFA Institute? It is encouraged but not required that a member reports violations to the CFA Institute.

Name three methods for compliance and maintaining knowledge about applicable laws, rules, and regulations. 1. Maintain files of application laws, rules, regulations 2. Keeping informed about changes in laws 3. Regularly reviewing compliance procedures to ensure they reflect current laws