CFA Level IEthical and Professional StandardsEasy
An analyst works for a global asset manager in a country where local securities law is less strict than the CFA Institute Code and Standards regarding client confidentiality. The analyst wants to know which rules govern her conduct. According to the Code and Standards, she must:
- AFollow whichever standard the client requests in writing
- BFollow local law for domestic clients and the Code and Standards only for foreign clients
- CFollow the Code and Standards because they are stricter than applicable local law
- DFollow local law because members must always defer to the law of the country where they are employed
Show answer & explanationAnswer & explanation
Correct answer: C. Follow the Code and Standards because they are stricter than applicable local law
Standard I(A) Knowledge of the Law requires members to comply with the more strict of applicable law, regulation, or the Code and Standards. Since the Code is stricter here, it governs regardless of client nationality.
Why the other options are wrong
- A. Client instructions cannot lower ethical requirements below the Code.
- B. The rule applies uniformly to all clients, not split by nationality.
- D. Incorrect; members do not automatically defer to local law when it is less strict.
Knowledge of the Law (I(A))
Members must understand and comply with all applicable laws, rules, and the Code and Standards, following whichever is stricter.
- Applies globally regardless of where the member is located
- Members must disassociate from known violations
- Stricter of local law vs. Code always governs
Memory trick: Strictest rule wins the race.