You are a US asset manager based in a foreign country where local law prevents disclosure of client confidential information by financial institutions. US authorities suspect one of your clients of illegal activities and ask you for confidential information about this client. You provide the US authority what they have asked for. Are you in compliance with CFAI codes and standards?
no because he must comply with the stricter of CFAI standards and local law which in this case in the local law.
Answer pls I wud say no in exam but wud not sure
looks like a conflict between local and foreign ( US ) law, not a conflict with CFAI standards at all. Go with local i.e. do not disclose
It is true that you have to comply with the more strict law. In this case the US law is stricter. I would say, you should disclose.
no disclose comply with local law
im with no disclose for exactly the reason Kwon said
My answer is disclose. CFASniper, It would be nice if you can answer to this
To disclose or not to disclose are clear opposites and are not to be confused with the “more strict” rule. Where there is conflict, local law supercede. The “more strict” rule often refer to measures of materiality or judgement. And finally, you need to know the applicable law before you can contemplate using the “more strict” rule, OP did not disclose that, and that is the curve ball.
just read this in v1, must comply with local law and not disclose great question
Standard 3E. Schweser page 48. “Must keep information about current, former and prospective clients confidential unless: 1. The information concerns illegal activities on the part of the client or prospective client 2…” does this not apply?
jmac01 Wrote: ------------------------------------------------------- > Standard 3E. Schweser page 48. “Must keep > information about current, former and prospective > clients confidential unless: 1. The information > concerns illegal activities on the part of the > client or prospective client 2…” > > does this not apply? You are not answerable to the US authority that suspect your client!
You can not break the law!! By disclosing you are breaking the law! When you disclose the clients name, you can tell your prison inmate how “ethical” you are. So ya, no disclose. Any other answer makes zero sense.
I say you disclose because the CFA curriculum states that if “the information concerns illegal activities by the client, however, the member or candidate may have an obligation to report the activities to the appropriate authorities.” So CFAI is telling us we may have to come forward with the information even without someone asking for it. The question doesn’t state what the suspected illegal activity is, so we can’t assume that the US has no jurisdiction. DISCLOSE!
Official answer: Normally illegal activities are required to be disclosed to authorities but exceptions apply when local law prohibits this. Hence, do not disclose.