Soft Dollar Standards conflict with local law

At first, I thought people need to follow the more strict rule if the CFA standard is conflict with the local law. However, the question below picks the answer with the less strict rule. Can someone help explain this? Thanks! Lawrence Kelly is the Chief Investment Officer at a money management company that claims it is in compliance with CFA Institute Soft Dollar Standards. For the first time, the company has purchased securities in the country of Santa Rosa. He learns that under Santa Rosen law, one of the company’s soft dollar policies is forbidden, yet to conform with the law, Lawrence would have to violate the Soft Dollar Standards, but not the Standards of Professional Conduct. Lawrence: A) should follow the Santa Rosen Law and can still claim compliance with CFA Institute Soft Dollar Standards. B) must follow the Santa Rosen Law and cease claiming compliance with CFA Institute Soft Dollar Standards. C) must follow the CFA Institute Soft Dollar Standards, informing the Santa Rosen regulators of his reasons.

  • Explanation
  • References
    In cases when the Soft Dollar Standards conflict with local law, managers should follow local law and are still in compliance with the Standar

Do we have soft dollars standards currently in level 2

There’s only a paragraph on soft dollars in the current Level II CFA curriculum.

CFA told us to comply with local laws when the conflict with the CFA Codes and Standards, so the manager must comply with the local law, but make sure to disclose the conflict to CFAI.

First goal: stay out of jail.

At first, I always thought people need to follow the rules between CFA’s and the local ones, whichever has the higher standard. Am I missing something here? Thanks!

There’s a difference between being more strict and being contradictory.

You follow the more strict standard when they’re not contradictory. If the law says that you can use brokerage only to pay commissions, but not to pay for research, you follow the law and don’t buy research with soft dollars. And you’ve complied with the standard.

When they’re contradictory, you follow the law. If the law says that 10% of the brokerage has to be used for the benefit of the firm, you use 10% of the brokerage for the benefit of the firm. And you’ve violated the standard.

But you’ve stayed out of jail.

This is clear now. I guess I have to read ethcis a little more now. Never liked ehtics. Thanks a lot for your explanations!

My pleasure.

lol… just stay out of jail dududu100 in Magician’s voice

it seems that there is no Soft Dollar Standard in Schweser and arcording to this post , Soft Dollar Standard was dropped since 2015.

But I found a question concerning Soft Dollar Standard in a CFA Boston mock exam 2017.

So, I wonder whether we can really drop Soft Dollar Standard?

It’s in the 2017 curriculum. Same as 2016.

I means the Soft Dollars Standard in this link above. Magician, do you think we must read (and learn it)? Of course, it is better to learn than not learn for the exam, but it is time consuming.

Thanks in advance.

I was going to ask where it is

I found it in the BSAS mock exam and magician said it in a paragraph in the Curriculum.

Then I’m not going to worry about it, thanks.

So, you means Soft Dollars can not be in the exam?

Where is it in the curriculum? I don’t know what’s in ethics.

I havent found it in Curriculum yet (I dont have paper version of Curiculum) but magician said soft dollars is in 2017 curriculum. Besides, soft dollars is mentioned in the BSAS mock exam 2017 I took yesterday.

Can someone pls suggest ethics strategy? I do EOC Q and then do TT? I may spare a day or two after finishing other topics.