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FRM Part I · FRM Exam Part I · GARP Code of Conduct

Under the GARP Code of Conduct, an FRM candidate learns that a colleague at another firm has been misrepresenting the risk exposures of a fund to clients. The candidate has direct evidence of this. Which action is most consistent with the Code's fundamental responsibilities?

The member should take appropriate steps, such as reporting through proper channels, because the GARP Code requires integrity and prohibits condoning others' misrepresentation. Ignoring it, handling it informally with no follow-up, or waiting for client losses would all leave a known misrepresentation uncorrected.

  1. AIgnore the matter because the colleague works for a different firm
  2. BDiscuss it informally with the colleague and take no further action
  3. CTake appropriate steps, such as reporting through proper channels, rather than condoning the misrepresentationCorrect
  4. DWait until clients suffer losses before raising the issue

Explanation

The Code requires members to uphold professional integrity and to not knowingly misrepresent facts or condone others' violations. Staying silent or only informally discussing the matter would amount to tacitly accepting the conduct, which the Code does not allow.

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