CFAI 2009 Mock Asset Manager code of conduct

This is the extract from the vignette which is relevant for the question:

Compliance Members are required to ensure all their employees sign a statement and Support: acknowledging the firm’s mandatory compliance with the CFA Asset Managers Code; appoint a Compliance Officer reporting to the CEO and Board of Directors; maintain records regarding investment decisions for a minimum of six years; and portfolio information must be checked by another department within the Member firm.


Which of the FMA’s existing procedures regarding Compliance and Support least likely meets the minimum Standards of the Asset Managers Code? A. Maintaining records. B. Department confirmation. C. Independent Compliance Officer.


B: While confirmation is required to ensure that portfolio information is accurate, and complete, an independent third party, not within a department of the firm, should undertake the confirmation.

From this paragraph of the CFAI curriculum I would understand that independent confirmation is NOT a requirement but would enhance credibility: “By receiving an independent third-party confirmation or review of that information, clients have an additional level of confidence that the information is correct, which may enhance the Manager’s credibility”

I chose A because, from the curriculum: “Unless otherwise required by local law or regulation Managers should keep records for at least seven years.”

So how can from the texts above understand that independent confirmation is mandatory and 7 years are not? If 7 years are not mandatory then also independent confirmation it isn’t.

Not sure about the independent confirmation, but the standards recommend you keep records for 7 years – and you would do this when the firm has no clear guidelines of their own. If the firm states they keep records for 6 (or even 5 years), this is sufficient and compliant with the code and standards.

The standard recommends 7 years I agree, but this is the Asset Manager Code and as you can see from my extract they don’t say it’s recommended.

The two extracts from the CFAI curriculum are both ander the title “Manager Must:…”

Just had a read through. From the Asset Manager’s Code:

Manager’s must:

  • Ensure that portfolio information provided to clients by the Manager is accurate and complete a nd arrange for independent third-party confirmation or review of such information.

  • Maintain records for an appropriate period of time in an easily accessible format.

    • Regulators often impose requirements related to record retention. In the absence of such regulation, Managers must determine the appropriate minimum time frame for keeping the organization’s records. Unless otherwise required by local law or regulation Managers should keep records for at least seven years

Pretty clear that you must arrange for independent third party confirmation and you should keep records for at least 7 years - but you don’t have to.

My mistake: I misinterpreted the “or review” (I understood the company should review), but they are still referring to the third party. Third party can or confirm or review the information.

Thank you

I read the title of the thread as Mock Asset Manager Code , and tried to imagine what a mock asset manager was.