I was studying ethics today. I have a question. Lets say you are a CFA charter holder but not a fund manager. Your profession has nothing to do with Fund management. Now, personally, you play around with stocks and invest in markets. Lets say, you have put your own money, worth maybe 10,000 in some stock. You are in a lift, and just like some example in the Scheweser notes, you overhear that the CFO of the company telling earnings are pretty bad this quarter. Lets say, you guess your stock pile of that company would drop to 6,000 on hearing that news. According to CFA charterholder ethics you are not supposed to work on that piece of info since its non public material info or in other words, insider information. What would you truly do in real life if such a situation arises ?
Follow the CFA guidelines
Remaining lifetime value of charter < p(not getting caught)*($10,000-$6,000)
You’re bound to the code, like it or not.
If you charter is inactive because you did not pay the dues, according to the CFA guidelines are you bound by the CFA guidelines?
Nope. You’re no longer a charter holder:)
Really, map1?
No, not really:)) You’re only considered innactive, until payment of dues and/or submission of your early professional conduct statement:)) You’re still bound to the rules:D
Does anyone know how much the dues are? Can you stop paying them and start paying them again whenever you wish? Do they have a problem with that? Is it stated anywhere? I’m anxious to know even though I’m years away from worrying about that! … hopefully two years.
As far as I know, dues are established by the local Society you are joining. Check on a webpage. If you decide to join more than one societies, you have to pay for both memberships. They do have a problem with members not submitting the annual professional statement or dues. They consider you innactive and you don’t have the right to use the designation, but if you pay your balance they reactivate your charter and you can use it - volume I, page 104.
Here’s a good one. Tom Beringer is registered for June 2008 Level I CFA exam. In his desire to increase the chances of passing Level I exam, Tom decides to supplement the CFAI Curriculum by purchasing study aid developed by recognized third-party provider. After consulting the study-aid prices on the third-party provider’s web site, Tom decides to buy previously used notes. To do so, Tom utilizes on-line bidding service where in the process of researching Tom finds an auction for new, current year study-aid priced at slight discount compared with the third-party’s web site price. Tom submits his bid and wins the auction. After receiving the study aid in mail, Tom discovers that the study aid he bought is a high-quality photocopy. Upon such discovery Tom uses the study-aid since the price he paid was just a slight discount and the study aid was advertised as being genuine. By buying, and using the study-aid, Tom: 1. Did not violate and Standards of Practice 2. Violated Standard I (D) Misconduct 3. Violated Standard I (A) Knowledge of the Law 4. Violated Standard VII (A) Conduct as Member and Candidates in the CFA Program
I would say 2. He commited fraud.
guessing 1. since its not CFAI’s stuff that was ripped off.
- Violated Standard VII (A) Conduct as Member and Candidates in the CFA Program
- He thought it was new. He got hosed.
He decided to buy used material (because it was cheaper than on the web sites of third party providers). That would be ok, if the material is original (the original books), because the right to use the material passes from the buyer to the seller. But when the package arrives, he observes it is a high quality copy, and he decides to use it. That’s infringement of intellectual property/copyright laws or participation in one’s fraud. That’s fraud too.
From my point of view, it’s probably both, Knowledge of the Law (the more obvious one) and Misconduct - probably a harder one to argue since it’s not clear how this act would reflect adversely on Tom’s professional reputation, integrity or competence. Btw, something like this happened to me, except for the last part as i have returned the notes back to the seller, str8 to China and put a chargeback on my ccard. I was about to use the notes but realized the last moment that i might be in violation and decided not to do so. Thank god i was able to chargeback, otherwise it would be one costly lesson to learn. p.s. be careful when trying to save by buying on Ebay, stuff like this can get you disqualified even before the race starts 
rpradeephere Wrote: ------------------------------------------------------- > I was studying ethics today. I have a question. > > Lets say you are a CFA charter holder but not a > fund manager. Your profession has nothing to do > with Fund management. Now, personally, you play > around with stocks and invest in markets. Lets > say, you have put your own money, worth maybe > 10,000 in some stock. You are in a lift, and \> just like some example in the Scheweser notes, you \> overhear that the CFO of the company telling \> earnings are pretty bad this quarter. Lets say, \> you guess your stock pile of that company would \> drop to 6,000 on hearing that news. According to > CFA charterholder ethics you are not supposed to > work on that piece of info since its non public > material info or in other words, insider > information. > > What would you truly do in real life if such a > situation arises ? I left ethics for quite a while now but I was wondering if u would be able to verify/ supplement this material non public info with your own research; Then u can invest based on the mosaic theory ??? Thanks
Wouldnt Mosaic theory only apply in situations where you supplemented NON material non public info with other research?
map1 Wrote: ------------------------------------------------------- > He decided to buy used material (because it was > cheaper than on the web sites of third party > providers). > > That would be ok, if the material is original (the > original books), because the right to use the > material passes from the buyer to the seller. > > But when the package arrives, he observes it is a > high quality copy, and he decides to use it. > That’s infringement of intellectual > property/copyright laws or participation in one’s > fraud. That’s fraud too. If you IP violation to be fraud then anyone who reposts questions from Schweser (and possibly the CFAI materials as well) on this message board, knowingly or unknowingly, is violating the standards of practice as well.