Jorge Peña is a broker at Northwest Securities and CFA Institute member who passed Levels I and II of the CFA®examination in 2008 and 2009. Because of a demanding work schedule, he did not enroll for the 2010 Level III exam. He hopes to enroll for the 2011 Level III exam.
In January 2010, Peña decides to apply for a broker position with Harvest Financial and updates his résumé (curriculum vitae). He prominently displays ?CFA®candidate? on his resume and states that he ?completed both Level I and Level II of the Chartered Financial Analyst Program.?
During an interview with Peter Williams, a junior partner of Harvest Financial, Peña explains he currently has more than 100 brokerage clients. Based on relationships with those clients over the years, he feels confident that at least half of them will transfer their accounts to Harvest if he is employed there.
Under the ?Personal? section of his résumé, Peña lists ?referee for regional football league? and ?member of investment committee at the Mueller School.? Peña has been refereeing football matches for five years. It is a significant time commitment, but he explains that he enjoys the activity and that the fees of $50 per game more than pay for his travel expenses. Peña and Williams agree that $50 per game is not material. They then discuss Peña’s role on the investment committee of the Mueller School. The committee monitors and evaluates the performance of the school’s asset managers and brokers, including Harvest. It is a volunteer position, but the school allows all volunteers free use of the school’s athletic facilities. The School recently started charging non-students and faculty a membership fee of $500 per year to help recover their investment in the new athletic equipment. Peña and Williams agree that neither his refereeing nor his investment committee activities will interfere with his duties at Harvest.
After lunch, Williams introduces Peña to a former colleague, Gabriella Martinez who happens to be a client of Peña’s current employer and who also attended the same university as Peña. The colleague asks, ?In what area is your degree?? Peña replies, ?I mostly studied finance. I found the coursework to be very helpful preparation for the Chartered Financial Analyst program.? He then adds, ?You should move your account from Northwest Securities, there are rumors they are in trouble, which is why I want to leave?.
One month later, Peña accepts an offer of employment from Harvest Financial and formally discloses to the Human Resources department his refereeing of football matches
By accessing this mock exam, you agree to the following terms of use: This mock exam is provided to currently-registered CFA candidates. Candidates may view and print the exam for personal exam preparation only. The following activities are strictly prohibited and may result in disciplinary and/or legal action: accessing or permitting access by anyone other than currently-registered CFA candidates; copying, posting to any website, emailing, distributing and/or reprinting the mock exam for any purpose.
and that he sits on the Mueller School investment committee. On the first day in his new job, he hangs a framed copy of the CFA Institute Code of Ethics on his wall and places a copy of the Standards of Practice Handbook on his bookshelf for easy reference. Later that day, Peña uses public records to contact his clients. He informs them of his new position and asks them to transfer their accounts to Harvest so he can continue acting as their broker. One month after starting his new job, only 25 of Peña’s clients have transferred their accounts to Harvest.
At Harvest, Peña attends an educational seminar about a new tax-advantaged investment program available for clients saving for college and university expenses. The program offers families the opportunity to obtain growth and distribution of earnings that are free from federal taxes. More than 80 individual plans are available and more than one-quarter provide additional local tax benefits. In the interest of time and for the sake of simplicity, the Harvest supervisor provides information on only one plan, which offers only federal tax benefits.
During the seminar, the supervisor shows the federal tax savings available under the plan given a number of different scenarios. He informs the brokers that the plan is subject to the same compliance and suitability requirements that apply to the sale of non-tax advantaged products. The supervisor then distributes the paperwork associated with the plan along with the firm’s compliance and suitability requirements.
7. When listing himself as a CFA®candidate on his résumé (curriculum vitae), did Peña violate any CFA Institute Standards of Professional Conduct?
A. No.
B. Yes, with regard to enrollment
C. Yes, with regard to completion level.
With respect to the fees he receives as a football referee, has Peña violated any CFA Institute Standards?
A. No.
B. Yes, because he failed to receive written consent from his employer.
C. Yes, because he failed to receive written consent from all parties involved.
According to CFA Institute Standards, after commencing employment with Harvest, Peña is
least likelyto have violated which Standard with regard to his relationship with Mueller School?
A. Misrepresentation.
B. Conflicts of Interest.
C. Additional Compensation.
During Peña’s conversation with Martinez, which Standard below is
least likelyto have been violated?
A. Loyalty.
B. Misrepresentation.
C. Reference to the CFA Program.
Based only on the information describing his first month of employment at Harvest, did Peña violate any CFA Institute Standards during that time?
A. No.
B. Yes, because he solicited clients from his previous employer.
C. Yes, because he failed to inform his supervisor in writing of his obligation to comply with the Code and Standards.
Based only on the information describing his first month of employment at Harvest, did Peña violate any CFA Institute Standards during that time?
A. No.
B. Yes, because he solicited clients from his previous employer.
C. Yes, because he failed to inform his supervisor in writing of his obligation to comply with the Code and Standards.