If Jenny,CFA, portfolio manager of an investment advisory firm delegates some of her supervisory duties to kelly,CFA after educating her on methods to prevent and detect violations of the firm’s compliance procedures. Despite these efforts, Jenny finds that a subordinate of Kelly might have been in violation of law. What is the initial course of action according to SOPH? 1. suspend the employee 2. suspend Kelly from supervisory duties 3. initiate an investigation to determine the extent of wrongdoing 4. demand that the employee provide assurances that the activity will not be repeated I think that 1 and 4 are out. But I’m not sure about 2 or 3… please pitch in your answers/explanations.


  1. Might have been…

anupamjain008, Thank you for posting a good post, usually i’ve noticed you give away the answer before even you post the questions or towards the end of it. I realize for others to gain the most of out a question, it’s best to keep the answer secret until a fair discussion of the topic has taken place. But do tell us the answer eventually :slight_smile:

Suspending the employee, his/her supervisor, or demanding the employee to never again repeat the activity is not good enough. An investigation has to be conducted to determine the extent of the damage. I would say 3 too.

I am for 3 too. Please tell us this is right :slight_smile:

I am feeling confident it is 3. if it not i’ll be broken. Ethics is my strong area, even though it has a lot of overlap. Always think what you’d do in terms of ethical standards, and that’s the goal of ethics. Firing an employee for a violation is not good without even know what the employee violated, similarilly kelly could be a good supervisor, but its possible that her subordinate sneaked and jumped the hoops to violate something, so kelly even tho responsible for it doesn’t mean has to be demoted. and demanding assurance is not enough anyways, infact implement procedures that doesn’t allow that violation again.

3, I have seen this question, in so many words, quite a few times.

I’ve also seen this a number of times. 3

I need to read the handbook again. I got schooled on a book 6 exam last night…,704161,706191#msg-706191 mock exam 1

okay so thanks pashuha00… this means 3 is correct! :slight_smile: Actually I myself did not have the answer to the question and hence did not post it. Also, I don’t have acccess to internet all the time and hence avoid delaying posting the answers.

Here Jenny is not 100% sure if the employee voilated a standard. So 1 & 2 are very hard decisions to the problem we have here. 3. An investigation to find the extend of violation if any is required. 4. is required only if the employee committed a violation So the answer is 3.

3 is the best bet – 1 is too harsh