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CFA Level I · CFA Level I Exam · Guidance for Standard I: Professionalism

A portfolio manager's firm asks how it can best help prevent general misconduct by employees under Standard I(D). The most appropriate recommendation is to:

The firm should adopt a code of ethics to which every employee must subscribe and make clear that any personal behavior reflecting poorly on the individual, the institution, or the investment industry will not be tolerated. Reactive or office-hours-only policies do not match the recommended compliance practice.

  1. Arequire employees to disclose misconduct only after it is reported by clients
  2. Badopt a code of ethics that every employee must subscribe to and state that behavior reflecting poorly on the firm or industry will not be toleratedCorrect
  3. Climit misconduct policies to employee conduct occurring during working hours at the office

Explanation

Compliance guidance for Standard I(D) encourages firms to adopt a code of ethics for every employee and to make clear that personal behavior reflecting poorly on the individual, the institution, or the industry will not be tolerated. Reactive disclosure or office-hours-only limits fall short of this.

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