From page 69: “Example 4: David Bradford manages money for a family-owned real estate development corporation. He also manages the individual portfolios of several of the family members and officers of the corporation, including the chief financial officer (CFO). Based on the financial records from the corporation, as well as some questionable practices of the CFO that he has observed, Bradford believes that the CFO is embezzling money from the corporation and putting it into his personal investment account. Comment: Bradford should check with his firm’s compliance department as well as outside counsel to determine whether applicable securities regulations require reporting the CFO’s financial records.” Does that mean that if applicable securities regulations DO NOT require reporting the CFO’s financial records, the David Bradford should remain silent on the issue in order to comply with the CFA Code of Ethics? Should he stop managing these accounts in order to dissociate himself from unethical activities?
I think the key point here is not the CFO’s financial records alone, but the embezzlement of the CFO. There may not be any regulation requirement to report the CFO’s financial records, however, once there is any unethical/illegal thing happening, the records will have to be reported.
george_ddw Wrote: ------------------------------------------------------- > I think the key point here is not the CFO’s > financial records alone, but the embezzlement of > the CFO. There may not be any regulation > requirement to report the CFO’s financial records, > however, once there is any unethical/illegal thing > happening, the records will have to be reported. I understand that. I understood the point of the question. I, however, would like to go one step further. That’s why I’m wondering what would be the best course of action would be if applicable securities regulations DID NOT require reporting the CFO’s financial records (in the circomstances described)