Jay Simpson was recently convicted of a felony in the state of California. Jay is a resident of Arizona, where he conducts all his business. The felony conviction resulted from activities not related to his primary business. With regard to standard II.B-Professional Misconduct, Jay has:
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A. B. C. D. E.A
Standard II (B) is violated if convictions for felony or similar offenses occur, regardless of whether the offenses were related to the member's professional activities or not.
Standard II.B of the CFA Institute's Code of Ethics and Standards of Professional Conduct addresses professional misconduct. In this case, Jay Simpson, a resident of Arizona, was convicted of a felony in the state of California for activities unrelated to his primary business.
To determine whether Jay violated the standard, we need to consider the relevant factors:
Nature of the conviction: The standard does not explicitly define what constitutes professional misconduct in the context of criminal convictions. However, it is generally understood that felony convictions can be considered professional misconduct if they involve activities that are directly related to the individual's professional responsibilities or demonstrate a lack of integrity or honesty. In this case, the felony conviction is stated as being unrelated to Jay's primary business.
Jurisdiction: The fact that Jay is a resident of Arizona, where he conducts all his business, raises the question of whether the conviction in California should be considered relevant to his professional conduct. The Code of Ethics does not specify that only convictions in the individual's resident state should be taken into account. The standards apply to all CFA charterholders and candidates, regardless of their location.
Considering these factors, we can evaluate the provided answer options:
A. violated the standard since felony convictions are considered professional misconduct. This answer is not correct because whether the felony conviction constitutes professional misconduct depends on the nature of the conviction and its relevance to Jay's professional responsibilities, as discussed above.
B. not violated the standard since the conviction occurred in a non-resident state. This answer is not correct because the Code of Ethics does not limit the consideration of professional misconduct to convictions in the resident state only. Convictions in any jurisdiction can be relevant to an individual's professional conduct.
C. not violated the standard since AIMR does not impose sanctions for felony convictions. This answer is not correct because the CFA Institute's Code of Ethics and Standards of Professional Conduct does not mention AIMR (Association for Investment Management and Research) as the governing body. The CFA Institute has its own standards and is responsible for enforcing them.
D. not violated the standard since the conviction is for non-business activities. This answer is correct. Given that the felony conviction is unrelated to Jay's primary business, it is less likely to be considered professional misconduct according to Standard II.B.
E. none of these answers. This answer is not correct. Option D correctly identifies that Jay has not violated the standard, so it is a valid answer choice.
Therefore, the correct answer is D. Jay has not violated the standard since the conviction is for non-business activities.