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Question of the Week - Ethical and Professional Standards

AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
edited September 2014 in Level 1 Questions
Henry Williamson, CFA, is also a Fellow of the Society of Actuaries (SOA). Henry is required to abide by the SOA's Code of Conduct as a fellow. Part of that Code of Conduct is as follows: PRECEPT 4. An Actuary who issues an Actuarial Communication shall take appropriate steps to ensure that the Actuarial Communication is clear and appropriate to the circumstances and its intended audience and satisfies applicable standards of practice. If Henry issues actuarial communications that do not adhere to the actuarial standards of practice, what Standard would Henry most directly violate?

Question of the Week - Ethical and Professional Standards 49 votes

Knowledge of the Law
59%
tachemanfabianWesMantoothAdaptPrepjmsatchwelljessmatPiasurangasaRandallK27Lollypollyec_testkrishTasimply_complex2kajzandshannondailyamgbattssrsinghaylouis13justgoYeshank 29 votes
Loyalty, Prudence, and Care
12%
TeemoOXNetojimywho1ghateleytoonervaRowen810 6 votes
Communication with Clients and Prospective Clients
28%
policedogmaboi_1dacraigydjak5189Allendscarpaunfer11seba216thendry7roverfanclubryleibelshanerfleuryJWhitmerPahtsan 14 votes
tachemanshannondaily

Comments

  • Knowledge of the Law
    @PassedTense‌
    I didn't know that Knowledge of the Law includes other Codes of Conduct (i.e. not strictly speaking, 'law').
    fabianPahtsan
  • AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
    Knowledge of the Law

    This is an application of Standard I.A:

    Knowledge of the Law. Members and Candidates must understand and comply with all applicable laws, rules, and regulations (including the CFA Institute Code of Ethics and Standards of Professional Conduct) of any government, regulatory organization, licensing agency, or professional association governing their professional activities. In the event of conflict, Members and Candidates must comply with the more strict law, rule, or regulation. Members and Candidates must not knowingly participate or assist in and must dissociate from any violation of such laws, rules, or regulations.

    Loyalty, Prudence, and Care addresses dealings with clients. While its "act with reasonable care and exercise prudent judgment" clause may be violated, that would be indirect. There is no indication that this communication does not satisfy the Communication with Clients and Prospective Clients, but Henry must satisfy the stricter regulation.

  • Knowledge of the Law

    This is an application of Standard I.A:

    Knowledge of the Law. Members and Candidates must understand and comply with all applicable laws, rules, and regulations (including the CFA Institute Code of Ethics and Standards of Professional Conduct) of any government, regulatory organization, licensing agency, or professional association governing their professional activities. In the event of conflict, Members and Candidates must comply with the more strict law, rule, or regulation. Members and Candidates must not knowingly participate or assist in and must dissociate from any violation of such laws, rules, or regulations.

    Loyalty, Prudence, and Care addresses dealings with clients. While its "act with reasonable care and exercise prudent judgment" clause may be violated, that would be indirect. There is no indication that this communication does not satisfy the Communication with Clients and Prospective Clients, but Henry must satisfy the stricter regulation.

    Useful - thanks!
  • shannondailyshannondaily St. Louis, MOPosts: 72 Sr Associate
    edited November 2014
    Knowledge of the Law
    Woo! I got it right. 
  • Communication with Clients and Prospective Clients
    Here is what I think made this question confusing:
    "If Henry 'ISSUES ACTUARIAL COMMUNICATIONS' that do not adhere to the actuarial standards of practice, what Standard would Henry most directly violate?"
    -Leads me to think the answer relates to COMMUNICATION.
    Also, there is no indication that he didn't simply disregard his "knowledge" of the law...
    For what it's worth.

    After further consideration, I think it is impossible to violate "communications with prospects and clients".
    My question is:
    If a CFA charter holder is acting as CPA.. or acting as a professional of any other skill-set, is "Knowledge of the Law", the ONLY standard that could possibly be violated?
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