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CFA Level I · CFA Level I Exam · Ethics and Trust in the Investment Profession

A firm has adopted a detailed written code of ethics, but employees treat it as a dusty compilation. According to the CFA Institute, which action is most likely to address the problem?

The most suitable action is for senior management to demonstrate a culture of integrity and for staff to practice ethical decision-making. A code is necessary but insufficient; it must be integrated into the business, and a natural desire to do right is not enough alone.

  1. AAdd further written rules to the existing code of ethics
  2. BRely on employees' natural desire to do the right thing
  3. CHave senior management demonstrate a culture of integrity and train staff in ethical decision-makingCorrect

Explanation

The text says a code of ethics is necessary but insufficient. Senior management's development, maintenance and demonstration of a culture of integrity may be the single most important factor, and practicing ethical decision-making builds the muscle memory needed. Natural inclination alone is no match for daily decisions, and more rules do not integrate the code into the business.

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