Molly Burnett, CFA, is a portfolio manager for a fund that only invests inenvironmentally friendly companies. A multinational utility company recentlyacquired one of the fund’s best performing investments, a wind power company. The wind power company’s shareholders received utility companysharesas part of the merger agreement. The utility has one of the worst environmental records in the industry, but its shares have been one of the TOP performersover the past 12 months. Because the utility pays a high dividend every threemonths, Burnett holds the utility shares until the remaining two dividends arepaid for the year then sells the shares. Burnett most likely violated the CF人工智能nstitute Standard of Professional Conduct concerning:
B 、disclosure of conflicts.
C、 independence and objectivity
Pia Nilsson is a sole proprietor investment advisor. An economic recession hasreduced the number of clients she advises and caused revenues to decline. Asa result, Nilsson has not paid her CFA Institute membership dues for the pasttwo years. When a national financial publication recently interviewed Nilsson,she indicated that up until two years ago she had been a CFA charterholderand a CFA Institute member in good standing. In addition, she stated thecompletion of the CFA Program enhanced her portfolio management skillsand enabled her to achieve superior returns on behalf of her clients. Which ofNilssons following actions most likely violated the CFA Institute Standards ofProfessional Conduct?
A 、Nonpayment of CFA Institute membership dues
B 、Attributing her superior returns to participation in the CFA Program
C、 Indicating that being a CFA charterholder has enhanced her portfolio management skillsView answer resolution【Answer to question 1】A
A is correct because the utility is not a suitable investment for a fund that only invests in companies with good environmental records. Continuing to hold this investment, therefore, was a violation of StandardIII(C)–Suitability.
B is incorrect because the violation concerns an unsuitable investment. Although the manager has a conflict of interest concerning her desire to hold onto a high dividend stock that has performed well in the past despite it being unsuitable for the Fund, disclosing this would not alleviate the fact that the holding is unsuitable for the Fund that only investments in companies with good environmental records.
C is incorrect because there has not been a violation of independence and objectivity【Answer to question 2】B
B is correct because it is a violation of StandardVII(B)–Responsibilities as a CFA Institute Member or CFA Candidate to claim that the CFA charter helped her to achieve superior returns.
A is incorrect because it is appropriate to claim that being a charterholder has improved her portfolio management skills.
C is incorrect because it is not a violation to not pay fees if the person does not claim to be a CFA charterholder or a member of the CFA Institute.