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

A fund manager states that compliance with all applicable regulations is sufficient to earn the trust of investors. Which response is most consistent with the CFA Institute's view?

The manager is wrong. Although markets are highly regulated, compliance alone is insufficient to fully earn investor trust. Firms and individuals need a culture of integrity that permeates all levels and puts stewardship of client assets and clients' best interests above and beyond strict legal compliance.

  1. AAgree, because global capital markets are highly regulated to protect investors
  2. BDisagree, because firms must develop a culture of integrity that goes above and beyond strict legal complianceCorrect
  3. CAgree, because regulators ultimately determine the ethical principles that apply to members

Explanation

The text says compliance with regulation alone is insufficient to fully earn investor trust. Individuals and firms need a culture of integrity permeating all levels, promoting stewardship and acting in clients' best interests beyond strict compliance. Options A and C wrongly treat regulation as enough.

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