CFA CFA Level 1 Question of the Week – Ethical and Professional Standards

Question of the Week – Ethical and Professional Standards

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    • AdaptPrep
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      Henry Williamson, CFA, is also a Fellow of the Society of Actuaries (SOA). Henry is required to abide by the SOA’s Code of Conduct as a fellow. Part of that Code of Conduct is as follows:

      PRECEPT 4. An Actuary who issues an Actuarial Communication shall take appropriate steps to ensure that the Actuarial Communication is clear and appropriate to the circumstances and its intended audience and satisfies applicable standards of practice.

      If Henry issues actuarial communications that do not adhere to the actuarial standards of practice, what Standard would Henry most directly violate?

      • Knowledge of the Law
      • Loyalty, Prudence, and Care
      • Communication with Clients and Prospective Clients
    • tacheman
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      @PassedTense‌ 
      I didn’t know that Knowledge of the Law includes other Codes of Conduct (i.e. not strictly speaking, ‘law’).

    • AdaptPrep
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      This is an application of Standard I.A:

      Knowledge of the Law. Members and Candidates must
      understand and comply with all applicable laws, rules, and regulations
      (including the CFA Institute Code of Ethics and Standards of Professional
      Conduct) of any government, regulatory organization, licensing agency, or
      professional association governing their professional activities. In the event
      of conflict, Members and Candidates must comply with the more strict law, rule,
      or regulation. Members and Candidates must not knowingly participate or assist
      in and must dissociate from any violation of such laws, rules, or regulations.

      Loyalty, Prudence, and Care addresses dealings with
      clients. While its “act with reasonable care and exercise prudent
      judgment” clause may be violated, that would be indirect. There is no
      indication that this communication does not satisfy the Communication with
      Clients and Prospective Clients, but Henry must satisfy the stricter regulation.

    • tacheman
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      This is an application of Standard I.A:

      Knowledge of the Law. Members and Candidates must
      understand and comply with all applicable laws, rules, and regulations
      (including the CFA Institute Code of Ethics and Standards of Professional
      Conduct) of any government, regulatory organization, licensing agency, or
      professional association governing their professional activities
      . In the event
      of conflict, Members and Candidates must comply with the more strict law, rule,
      or regulation. Members and Candidates must not knowingly participate or assist
      in and must dissociate from any violation of such laws, rules, or regulations.

      Loyalty, Prudence, and Care addresses dealings with
      clients. While its “act with reasonable care and exercise prudent
      judgment” clause may be violated, that would be indirect. There is no
      indication that this communication does not satisfy the Communication with
      Clients and Prospective Clients, but Henry must satisfy the stricter regulation.

      Useful – thanks!

    • shannondaily
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      Woo! I got it right. 

    • shanerfleury
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      Here is what I think made this question confusing:
      “If Henry ‘ISSUES ACTUARIAL COMMUNICATIONS’ that do not adhere to the actuarial standards of practice, what Standard would Henry most directly violate?”
      -Leads me to think the answer relates to COMMUNICATION.
      Also, there is no indication that he didn’t simply disregard his “knowledge” of the law…
      For what it’s worth.

      After further consideration, I think it is impossible to violate “communications with prospects and clients”.
      My question is:
      If a CFA charter holder is acting as CPA.. or acting as a professional of any other skill-set, is “Knowledge of the Law”, the ONLY standard that could possibly be violated?

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