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

A CFA charterholder advises clients in a country that has no law or regulation on disclosing referral fees. Under the Code and Standards, the charterholder most likely:

The charterholder must disclose referral fees. Where no law governs the action, or the law is less demanding, members must follow the Code and Standards, which require disclosure of referral fees. A lack of local legal requirements does not remove that obligation.

  1. Aneed not disclose referral fees, because no law requires it
  2. Bmust disclose referral fees, because the Code and Standards impose that obligationCorrect
  3. Cmay disclose referral fees only if the client asks about them

Explanation

When no applicable law exists, or the Code and Standards impose a higher degree of responsibility than the law, members and candidates must adhere to the Code and Standards. The Code and Standards require disclosure of referral fees, so the absence of a local law does not remove the duty. The other options treat legality as the limit of ethical duty, which is wrong.

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