Reading 2 :CFA EOC Q # 60 :
They say here that Vinken is in compliance. He maintains only 5 years of records-isn’t 7 required?
Am I missing something?
The question shows, 5 years required by regulators.
CFA says, in the absence of regulatory guidance, CFAI recommends maintaining record for at least 7 years.
so is this a case of local law vs. Standards?
Reading 2 Guidance for Standards I-VIII provides a section on Standard V© Record Retention (pages 146-148) that states, " Local regulators often impose requirements on members, candidates, and their firms related to record retention that must be followed…Fulfilling such regulatory and firm requirements satisfies the requirements of Standard V©. In the absence of regulatory guidance or firm policies, CFA Institute recommends maintaining records for at least seven years."
I interpret this as: Member or candidate is required to follow, at a minimum, the regulatory and firm compliance policy related to record retention. This record retention policy could vary in terms of length and duration, but it must be followed. If there isn’t any regulatory or firm policy on record retention, the best practice is to follow the recommended 7 year retention suggestion from the CFAI.
The practice problem set states that “Vinken insists that he will continue to maintain only hard-copy records for the Stonebridge Fund for the five years required by regulators.”
Since there is regulatory policy on record retention of five years, Vinken must retain copies supporting his investment analyses and research reports for five years. If there wasn’t a record retention term length specified by the regulators, then the CFAI recommended seven years would apply. As such, Vinken is in compliance with Standard V©.
Hope this helps!
OMGMileyCyrus
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Thanks OMG and Frank. You made it very clear for me.
I think it is kinda contradicting with “Stricter of CFAI ethics or local regulations” approach, CFAI requirement of 7 years is surely a stricter one…