CFA Level IEthical and Professional StandardsMedium
A CFA charterholder is convicted outside of his professional duties of felony tax evasion involving deliberate falsification of personal financial records. His employer is unaware of any workplace misconduct. Under Standard I(D) Professional Misconduct, this conduct:
- AOnly violates the Code if the employer terminates him as a result
- BDoes not violate the Code because it is unrelated to his professional duties
- COnly violates the Code if the conviction is reported in the financial press
- DViolates the Code because it involves dishonesty reflecting on his integrity and competence
Show answer & explanationAnswer & explanation
Correct answer: D. Violates the Code because it involves dishonesty reflecting on his integrity and competence
Standard I(D) covers conduct involving dishonesty, fraud, or deceit that reflects poorly on a member's professional reputation, integrity, or competence, even if unrelated to professional activities. Tax evasion via deliberate falsification is such an act.
Why the other options are wrong
- A. Employer action is irrelevant to whether a Code violation occurred.
- B. Incorrect; personal conduct involving dishonesty is still covered.
- C. Public disclosure is not a precondition for a violation.
Misconduct (I(D))
Members must not engage in professional or personal conduct involving dishonesty, fraud, or deceit that reflects adversely on their integrity or competence.
- Applies even to conduct unrelated to investment activities
- Deliberate falsification and fraud are clear violations
- Simple legal infractions unrelated to dishonesty (e.g., minor traffic violations) typically do not violate the standard
Memory trick: Dishonesty anywhere taints everywhere.