Which Statement is Incorrect?

B

Standards II through V address specific conduct, while Standard I contains principles guiding the general activities of members. This distinction should be noted.

The correct answer is D. "Members are not required to report legal violations to the appropriate governmental or regulatory organizations."

Let's break down each statement to understand why the other options are correct and why option D is incorrect:

A. "All of these statements are correct." This option states that all the statements provided are correct. If this statement were true, then it would mean that all the other options (B, C, and E) are correct, making option D incorrect. However, we need to assess each statement individually to determine if they are indeed correct.

B. "Standards II through V contain principles guiding the general activities of members." This statement is correct. The CFA Institute's Code of Ethics and Standards of Professional Conduct is divided into seven standards, and Standards II through V specifically provide guidance on the general activities of members. These standards cover topics such as Integrity of Capital Markets, Duties to Clients, Duties to Employers, and Investment Analysis, Recommendations, and Actions.

C. "Members who work in a country where the Code and Standards impose a higher degree of responsibility than local laws and regulations must adhere to the Code and Standards." This statement is also correct. The CFA Institute requires its members to adhere to the Code and Standards regardless of the local laws and regulations in their respective countries. If the Code and Standards impose a higher degree of responsibility than local laws and regulations, members must follow the higher standards set by the CFA Institute.

D. "Members are not required to report legal violations to the appropriate governmental or regulatory organizations." This statement is incorrect. CFA Institute members have an obligation to report any legal violations to the appropriate governmental or regulatory organizations. Upholding the integrity of the financial markets and complying with legal requirements are essential aspects of the CFA profession.

E. "Members who work in a country where the Code and Standards impose a lesser degree of responsibility than local laws and regulations must adhere to the local laws and regulations." This statement is correct. If members work in a jurisdiction where local laws and regulations impose a higher degree of responsibility than the Code and Standards, they are required to adhere to the local laws and regulations. The Code and Standards act as a minimum ethical standard, and members must follow more stringent requirements if their local laws and regulations demand it.

In summary, the correct answer is D because it states an incorrect statement. CFA Institute members are indeed required to report legal violations to the appropriate governmental or regulatory organizations.