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CFA Level I · CFA Level I Exam · Code of Ethics and Standards of Professional Conduct

A portfolio manager's conduct is legal under all applicable laws, but it violates a provision of the CFA Institute Code and Standards. Which statement about the manager's position is most accurate?

The conduct is a violation. The guidance to Standard I(A) states that members and candidates must not engage in conduct that violates the Code and Standards even though it may otherwise be legal; compliance with law is only the minimum threshold, and no regulator finding is required.

  1. AThe conduct is acceptable because it complies with applicable law, the minimum threshold of acceptable actions.
  2. BThe conduct is a violation, because members must not engage in conduct that violates the Code and Standards even though it may otherwise be legal.Correct
  3. CThe conduct is a violation only if a regulator also finds that it harmed a client.

Explanation

The guidance to Standard I(A) states that members and candidates must not engage in conduct that constitutes a violation of the Code and Standards, even though it may otherwise be legal. Legal compliance is only the minimum threshold. The first option misuses that minimum as the full measure, and the third makes a regulator's finding a condition that the Standards do not impose.

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