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CFA Level I · CFA Level I Exam · Guidance for Standard IV: Duties to Employers

Ana Ruiz, a portfolio manager, is told by her supervisor to follow a firm policy requiring the use of a particular broker, even though the policy conflicts with applicable securities regulations. The most appropriate interpretation of Standard IV(A) is that Ruiz:

Ruiz must follow employer policies only to the extent they do not conflict with applicable laws, rules, and regulations or the Code and Standards. Compliance with employer policies is implicit in Standard IV(A), but a policy that conflicts with regulation does not bind her.

  1. Amust follow the policy because compliance with employer policies is implicit in the standard.
  2. Bmay ignore every employer policy that she personally considers disadvantageous to her clients.
  3. Cis required to follow employer policies only to the extent they do not conflict with applicable laws, rules, and regulations or the Code and Standards.Correct

Explanation

Implicit in Standard IV(A) is the obligation to comply with employer policies governing the employer-employee relationship, but only to the extent they do not conflict with applicable laws, rules, regulations or the Code and Standards. The first option ignores this limit. The second overstates it, since members cannot disregard policies merely because they dislike them.

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