Under what conditions is Standard II (B)- Professional Misconduct violated?
I. The member is convicted of a misdemeanor.
II. The member regularly engages in unprofessional but legal behavior.
III. The member engages in dishonest activities that do not result in criminal conviction.
IV. The member is convicted of a felony.
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A. B. C. D.A
This question pertains to Standard II (B) - Professional Misconduct. A misdemeanor conviction is only considered grounds for a violation of II (B) if it occurs repeatedly, or involves "moral turpitude" (lying, cheating, stealing, or other dishonest conduct). Unprofessional and dishonest behavior or a felony conviction are violations of Standard II (B).
Standard II (B) of the CFA Institute's Code of Ethics and Standards of Professional Conduct states that members must not engage in any professional misconduct. Professional misconduct refers to behavior that is unethical, improper, or violates the principles of the CFA Institute's Code of Ethics.
Let's analyze each condition and determine whether it violates Standard II (B):
I. The member is convicted of a misdemeanor. A misdemeanor is generally considered a less serious offense than a felony and typically includes offenses such as minor theft, public intoxication, or disorderly conduct. While a misdemeanor conviction may indicate unprofessional behavior, it does not necessarily violate Standard II (B) on its own. However, if the misdemeanor conviction is directly related to the member's professional activities or involves dishonesty or fraud, it would likely violate Standard II (B). Without further information, it is difficult to definitively determine if this condition alone violates the standard.
II. The member regularly engages in unprofessional but legal behavior. This condition refers to behavior that is not explicitly illegal but may still be considered unprofessional. Unprofessional behavior may include actions such as making misleading statements, failing to disclose conflicts of interest, or breaching client confidentiality. While engaging in unprofessional behavior is not a criminal offense, it does violate Standard II (B) because it goes against the ethical principles of the CFA Institute.
III. The member engages in dishonest activities that do not result in criminal conviction. This condition describes situations where a member engages in dishonest activities that are not necessarily proven in a court of law, leading to a criminal conviction. Dishonest activities can include actions like misrepresenting financial information, providing false recommendations, or manipulating market data. Although the member has not been convicted of a crime, engaging in dishonest activities violates Standard II (B) as it undermines the integrity and professionalism expected of CFA charterholders.
IV. The member is convicted of a felony. A felony is a serious criminal offense, typically involving acts such as fraud, embezzlement, or insider trading. A conviction for a felony directly violates Standard II (B) because it demonstrates a severe breach of ethics and professionalism. Felony convictions imply significant harm caused to investors or the integrity of the financial markets, which is contrary to the expectations set by the CFA Institute.
Considering the analysis of each condition, we can conclude that all the options provided in the answers have some violations of Standard II (B). Here's a breakdown:
A. II, III & IV: This option includes violations of unprofessional behavior (II), engaging in dishonest activities (III), and felony conviction (IV). It covers all the conditions mentioned and is a likely answer.
B. I, II & IV: This option includes violations of unprofessional behavior (II), misdemeanor conviction (I), and felony conviction (IV). Although it lacks the violation related to dishonest activities (III), it is still a possible answer depending on the severity of the misdemeanor conviction.
C. I, II, III & IV: This option includes violations of unprofessional behavior (II), misdemeanor conviction (I), engaging in dishonest activities (III), and felony conviction (IV). It covers all the conditions mentioned and is a likely answer.
D. IV only: This option only includes the violation related to felony conviction (IV) and does not cover the other conditions mentioned. It does not fully address the question and is unlikely to be the correct answer.
In summary, the most comprehensive and accurate answer would be option C: I, II, III & IV.