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CFA Level I · CFA Level I Exam · Application of the Code and Standards: Level I

A CFA candidate lives and works in a country that has no securities laws governing the disclosure of referral fees. The candidate receives a fee from a broker for recommending the broker's services to clients. The candidate's most appropriate action is to:

The candidate should disclose the referral fee. When applicable law is silent or less strict, members and candidates must follow the Code and Standards, which require disclosure of referral fees to clients. Legality of silence does not remove the duty.

  1. Adisclose the referral fee, because the Code and Standards impose that obligation.Correct
  2. Bstay silent, because no law requires disclosure of the fee.
  3. Cdisclose the fee only if a client asks about it.

Explanation

Where no law applies or the Code and Standards impose a higher degree of responsibility, members and candidates must follow the Code and Standards. The Code and Standards require disclosure of referral fees even if the law does not. Staying silent or disclosing only on request falls short of that requirement.

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