Please help with two ethics questions which are both from mock exams.
[questions removed by admin]
regarding second question: u are not obliged to adopt CFAI code of ethics.
first question is confusing.
We learned from CFA textbooks that when applicable law and the CFA Code and Standards require different conduct, members and candidates must follow the stricter of the applicable law or the Code and Standards.
As we can see from this case, “no such policies are required by regulatory standards in the country where Smith works”. Doesn’t it mean that they should follow the stricter rule , which is the CFA Code and Standards in our case?
Her employee and the staff she supervise are not member of the CFA institute and so are not obliged to conform to CFA institute code of ethics. She could advice them to adopt the code or use the code to develop their own protocol but she cannot require the firm to adopt it
Regarding question 1, it is slightly odd but the only thing I can think of is that material information is information that other people would like to know when making an investment decision. If the HF had access to extra trading hours and others didn’t maybe Mancini disclosed this material info in giving them access?
Regarding question 2, you are right about the stricter laws and therefore having to decline responsibility.
Thank you!
Regarding Q2, why is A wrong?
Refer to standard 1 a)
The recommended procedure for firms is that the candidate should encoiurage firms to develop and/or adopt a code of ethics. There is no requirement for the candidate to specifically recomend CFAI code to the firm.
Regarding your understanding on " the stricter of the applicable law or the Code and Standards" keep in mind this applies to members and candidates not firms.While A would seem like a logically right answer too given the options C is the best answer.
I am stumped by the first question though. B seemed right to me too.
Is this a CFA mock exam? The first question is written poorly and seems to be missing a key peice of information that would indiciate the hedge fund has access to material non-public information