Ethics questions - What's your opinion?

Here’s a general question about answering ethics questions on the exam, in particular related to Research Objectivity Standards and Soft-Dollar Standards…

If a question goes like this: “Does company ABC’s [or company ABC’s certain action] comform/comply with the CFA Institute Research Objectivity Standards?”, do we need to consider the RECOMMENDED sections of the standards as well?

In other words, if ABC’s action complies fully with all REQUIRED sections but does NOT satisfy some RECOMMENDED standards, in this case does the company comply with the Standards?

You might be thinking, in that case, the answer would be “Yes, the company IS in compliance”, because a company that conforms with ALL required sections and NO recommmended sections is considered in full compliance with the Standards (whether it be Research Objectivity or Soft-Dollar). This is what I think, too. However, if you think so, then you are wrong!!

Look at the answers to the EOC questions of Reading 4 on page 224 of the curriculum Volume 1. In particular, questions 2 and 3 will better explain what I’m talking about…

[Spoiler Alert…]

– Question 2: Would you choose A? (Well, I would.) But the correct answer is C.

– Question 3: Would you choose “Yes, and Yes”? (I wanna, but it’s not one of the choices…). The correct answer is A.

[See my post below for the full questions.]

Anyone an expert on ethics? This is such a tricky thing and is confusing and bothering me now. I don’t want to go into the exam with perfectly memorized Standards in my head but got misled and ruined by questions like this.

Many thanks for any thoughts!

Post the questions. They do not need to comply w/ recommended stuff in order to be compliant.

agreed. IPO is a classic example where it’s recommended that participation not be allowed by employees, but that’s only a requirement in a few instances, oversubscribed or specifc to industry where employee works

Some of us don’t have L2 books, don’t be an asshole.

#2: He shouldnt get the i-banking dept to review it as they are biased cuz they are doing a deal for the company

#3: Reports should be updated quarterly i think. Final report also wrong as if you discontinue coverage you must send a final report saying that.

Hope that helps, good luck

  1. B, I don’t think it has to go through compliance

  2. A?

I agree with Andrew.

In addition you are in violation with the Standards by Professional conduct by posting the question from the book without getting prior permission from the copyright owner. I suppose that this is the Standard I, Knowledge of Law. What do you think, guys?

  1. C It should go through compliance before ibank.

  2. B Don’t recall what the frequency to update reports are…but updating annually and more frequently for substantial info sounds reasonable…

Haha, sorry didn’t notice you were a L3 candidate…

See, the thing is, the comments you made are based on the RECOMMENDED sections. When asked whether someone is in compliance, do we need to consider RECOMMENDED standards? Would REQUIRED standards suffice?

2: C

3: B

The post with the question got deleted (by admin or something)? It’s gone…

I checked the CFA curriculum books. They are just a regular publication that’s protected by copyright laws. It’s legal to cite from it by quoting specific paragraphs (unless there’s a weird country which bans citations)… I don’t think it’s a violation of Code and Standards to post very short sections from the books on this forum for discussion purposes, as it is not for commerical use or for making a copy without permission. Also, the CFA curriculum books can be found in many PUBLIC LIBRARIES, too.

Anyway, please refer to your own book for the questions. Thanks.