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

A CFA candidate works in a country that has no securities laws governing the disclosure of referral fees received for recommending investment products. Under the Code and Standards, the candidate most likely:

The candidate must disclose the referral fees. Where applicable law is silent or less strict, members and candidates must follow the stricter requirement, and the Code and Standards require disclosure of referral fees, so the lack of a legal requirement does not excuse non-disclosure.

  1. Aneed not disclose the fees, because no applicable law requires it.
  2. Bmust disclose the fees, because the Code and Standards impose the stricter requirement.Correct
  3. Cmust disclose the fees only if the client asks about compensation.

Explanation

When no law governs an action or the law differs from the Code and Standards, members and candidates must follow the more strict of the two. The Code and Standards require disclosure of referral fees even if the law does not. Relying on the absence of a law is therefore wrong.

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