John Cochrun is a reputed money manager who is also an AIMR member. John recently discovered that some employees at the firm where he is employed have been engaging in some questionable activity which could very well be construed as insider trading by the SEC. John, however, does not think the activity is egregious enough to be reported to the SEC. In any case, he does not want to be known as "the rat who blew the whistle." By not reporting the criminal activity,
John has:
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A. B. C. D.A
The AIMR code does not require members to report legal violations to the appropriate authorities, as long as they don't associate themselves with such activities.
Based on the given scenario, John Cochrun is a money manager and a member of AIMR (Association for Investment Management and Research), which is now known as CFA Institute. John has discovered that some employees at his firm have been engaging in questionable activity that could potentially be considered insider trading by the Securities and Exchange Commission (SEC). However, John personally believes that the activity is not severe enough to warrant reporting it to the SEC. He is also concerned about the negative repercussions of being known as the person who exposed the activity, commonly referred to as a "whistleblower."
To determine whether John has violated the AIMR code, we need to analyze the relevant standards of conduct within the code. The answer choices provided are:
A. Has not violated the AIMR code. B. Violated the AIMR code, Standard I (B) - Fundamental Responsibilities. C. Violated the AIMR code, Standard III (C) - Disclosure of Conflicts to the Employer. D. Violated the AIMR code, Standard III (B) - Duty to the Employer.
Let's examine each option in detail:
A. Has not violated the AIMR code: This answer suggests that John's actions are within the bounds of the AIMR code, meaning he has not violated any ethical standards. To determine the accuracy of this answer, we need to review the relevant sections of the AIMR code.
B. Violated the AIMR code, Standard I (B) - Fundamental Responsibilities: Standard I (B) of the AIMR code states that members must "act in a manner that is ethical and adds value to the integrity of the investment profession." It requires members to "uphold the ethical standards of the profession" and "deal fairly and objectively" with clients, employers, and other market participants. By not reporting the questionable activity, John might be failing to uphold the ethical standards of the profession and failing to act in a manner that adds value to its integrity. Therefore, it can be argued that John has violated Standard I (B) of the AIMR code.
C. Violated the AIMR code, Standard III (C) - Disclosure of Conflicts to the Employer: Standard III (C) of the AIMR code emphasizes the importance of disclosing conflicts of interest to the employer. While the scenario does not explicitly mention any conflicts of interest, if the questionable activity involves conflicts that should be disclosed, John's failure to report it could be seen as a violation of this standard.
D. Violated the AIMR code, Standard III (B) - Duty to the Employer: Standard III (B) of the AIMR code requires members to act in the best interests of their employer and not knowingly participate or assist in any unethical conduct. If John is aware of the questionable activity and chooses not to report it, he might be failing in his duty to act in the best interests of his employer and could be seen as participating or assisting in unethical conduct.
Considering the analysis above, the most accurate answer is likely either B or D, depending on the specific circumstances of the questionable activity and any potential conflicts of interest involved. Without further information, it is difficult to determine the exact standard that John has violated.
It is important to note that the AIMR code is designed to promote ethical behavior within the investment profession, and failure to comply with its standards can result in disciplinary action by AIMR or other regulatory bodies.