Page 52 - FINAL CFA II SLIDES JUNE 2019 DAY 1

MODULE 3.1: READING 3: APPLICATION OF THE CODE & STANDARDS

ETHICS CASE STUDIES

LOS 3.a: Evaluate policies and practices for a firm and an individual in relation to the CFA Institute Code of Ethics and Standards of
Professional Conduct.
LOS 3.b: Explain the appropriate action to take in response to conduct that violates the CFA Institute Code of Ethics and Standards of
Professional Conduct.

CASE RESULTS

Standard I(A) Professionalism: Knowledge of Law
Members and candidates should understand and comply with all applicable laws and regulations.

Violation/s:
• It may not be legal in many jurisdictions to solicit investments from teenagers even if the solicitations specify that it is for adults only.
• Additionally, it may be illegal in many jurisdictions to collect information about minors without the permission of their parents. Sharing
1ed to be carefully evaluated.
of information is further governed by various privacy laws that ne
Action/s:
• Agarway needs to ensure that Deko is in compliance with all applicable laws and regulations.

Standard VI(A) Conflict of Interest: Disclosure
• Members and candidates are required to disclose all conflicts of interest that could reasonably be expected to impair their
independence and objectivity.

Violation/s:
• Preferential access of market intelligence to members of the investment club may disadvantage other investors.
• Agarway’s personal investments may be competing with potential startup applicants creating a conflict of interest.

Action/s:
• Agarway’s personal investments that compete with prospects as well as the preferential access to market intelligence to members of
the investment club need to be disclosed to all investors.
Attempt the rest: 3 - 5