At Schweser material, one of the choices in a ethical Q is not counted as wrong. I’m wondering why??? A member or candidate can participate or assist in a violation simply by having knowledge of the violation and not taking action to stop it.
A member or candidate must dissociate themselves from a violation. Acting silent and condoning such action is a violation.
Ok. The original question is below: Which of the following statements is least likely correct? A member or candidate: A. can participate or assist in a violation simply by having knowledge of the violation and not taking action to stop it. B. is held responsible for participating in illegal acts in instances where violation of the law is evident to those who know or should know the law. C. when confronted with potentially illegal activities, should consult with her supervisor and her employer’s counsel. D. must report evidence of legal violations to the appropriate governmental or regulatory organization. I chose A but the answer is D.
You are not required to be a snitch by the CFAI, but they strongly encourage alerting the SEC of illegal actions and so forth.
hyang, with A, it’s true that if a candidate has knowledge of a violation and doesn’t try to stop it, they are participating or assisting in the violation. They are committing an ethical violation by doing so. Do not get “can” and “are allowed to” / “should” confused.
They suggest you seek outside legal counsel, then if necessary the authorities, then if necessary the CFAI
forumreader Wrote: ------------------------------------------------------- > hyang, with A, it’s true that if a candidate has > knowledge of a violation and doesn’t try to stop > it, they are participating or assisting in the > violation. They are committing an ethical > violation by doing so. Do not get “can” and “are > allowed to” / “should” confused. I hear what you say. In this particular question, statement A is incorrect, isn’t it? If so, then both A & D are least likely correct, right?
Gramatically this is confusing. Bear with me while I try to explain it in different words. If the question was phrased like this: Which of the following statements is least likely correct? A member or candidate: A. “is allowed to” participate or assist in a violation simply by having knowledge of the violation and not taking action to stop it. then it would be incorrect, and A could be the correct answer. The way you are actually supposed to interpret A is: A. “does” participate or assist in a violation simply by having knowledge of the violation and not taking action to stop it When A is phrased this way, it is true that there is a violation of the Standards when a member knows that a violation is occurring, but does nothing to stop it. Does this make more sense as to why the answer is D to this question?
hmm… the way you rephrase or interpret does make a difference. This is tricky though because common sense tells me if the member/candidate knows it’s a violation, s/he supposes to stop it or at the very least disassociate with it, let alone to participate or assist it - that seems to me an obviouse violation. Anyway, I get what you said. Thx very much.
BUMP disassociate, seek legal council, possibly inform SEC/regulatory authorities D