MCQ Quiz

Question 1 of 15

McDougal, a junior analyst on a temporary contract, engages in hostile behavior and makes threats against her supervisor, Clifford, after being denied a full-time role. Clifford falsely tells McDougal the position was eliminated due to restructuring to avoid a confrontation. McDougal later sends emails to clients falsely claiming Clifford is under investigation. Regarding the Standard on Misconduct, it is most likely that:

Clifford violated the Standard by lying about the reason for the position's elimination.
McDougal violated the Standard by making false and malicious claims to clients.
Neither party violated the Standard as the dispute was an internal employment matter.

Question 2 of 15

Nash discovers his firm is churning client accounts. He reports it internally but is ignored. He resigns and, at his employer's direction, sends a generic departure notice to clients. When a client calls to ask why he left, Nash truthfully details the churning scheme and encourages the client to transfer their account to his new firm to avoid further harm. Has Nash violated Standard IV(A)?

Yes, because he disparaged his former employer and solicited business, violating the duty of loyalty.
No, because the duty to protect client interests from harm outweighs the duty of loyalty to a corrupt employer.
Yes, because he should have reported the issue to regulators rather than discussing it directly with clients.

Question 3 of 15

Madeline, an unpaid intern at Murdoch & Lowell, helps develop code for a GIPS compliance software. She accepts a job at a competitor and copies the source code she worked on to aid her in her new role. She reasons that since she was unpaid, she is not an 'employee' and the code acts as a portfolio of her work. Has she violated Standard IV(A)?

No, because the lack of monetary compensation means no formal employment contract existed.
Yes, because she misappropriated firm property, and 'employment' status is defined by control and benefit, not just salary.
No, provided she deletes the code after showing it to her new employer as a work sample.

Question 4 of 15

Allen, an analyst, decides to start a competing firm. Without telling her current employer, she incorporates the new business and registers with the regulatory authorities. She continues to work full hours and meets all duties at her current job. She does not contact any clients. Has Allen violated Standard IV(A)?

Yes, because registering a competing firm is a public act of disloyalty.
No, because preparations to compete are permitted provided they don't interfere with current work or involve solicitation.
Yes, because she failed to disclose the potential conflict of interest to her employer.

Question 5 of 15

Crome leaves YBSafe Bank to join a competitor. She does not take any physical or electronic records. However, she has a photographic memory and reconstructs a list of her 50 wealthiest clients from memory. She contacts them to solicit their business. There is no non-compete agreement in place. Has Crome violated Standard IV(A)?

No, because she did not take any physical or electronic records and no non-compete exists.
Yes, because client identities and contact information are proprietary, regardless of how they are stored (memory vs. file).
No, because the knowledge of client names is considered part of her personal 'skills and experience'.

Question 6 of 15

Hightower, a senior PM at Jason Investment, decides to launch his own fund. To ensure continuity for his clients, he copies his own spreadsheet models for asset allocation and stock selection, which he built from scratch over the last 15 years. He also copies the client list to contact them after he resigns. He takes no other firm property. Has Hightower violated Standard IV(A)?

Yes, because both the client list and the models created during employment are the property of the employer.
No, regarding the models, because he created them himself and they represent his personal skill and intellectual capital.
Yes, but only regarding the client list, as the models are tools of his trade that he may take with him.

Question 7 of 15

Magee, a portfolio manager at Trust Assets, Inc., accepts an offer from Fiduciary Management. Before handing in his resignation, he identifies four large accounts that are unhappy with Trust Assets' recent performance. He contacts them to suggest they might be happier at his new firm, Fiduciary Management, and also persuades a prospective client he recently pitched on behalf of Trust Assets to sign with Fiduciary instead. Has Magee violated Standard IV(A)?

Yes, but only regarding the prospective client, as existing clients have a right to choose their manager.
Yes, because he solicited both current and prospective clients while still employed by Trust Assets.
No, because he acted in the best interest of the clients who were dissatisfied with Trust Assets.

Question 8 of 15

A team of analysts at Setup Corp plans to leave to form a new firm, NewCo. Before resigning, they learn that a major client of Setup Corp has issued an RFP. The team believes NewCo would be a better fit. They draft a response to the RFP on their own time and submit it under NewCo's name before resigning. Has the team violated Standard IV(A)?

No, because they worked on their own time and did not use Setup Corp's resources.
Yes, because submitting a proposal to a current client constitutes direct competition while still employed.
No, because preparations for a new business are permitted provided they do not interfere with current duties.

Question 9 of 15

Nickoli, an investment counselor, decides to leave her current firm, HHI, to join a competitor. Prior to resigning, she informs select clients that she will be leaving soon and mentions that she lacks confidence in HHI's current leadership and strategic direction. She does not explicitly ask them to follow her yet but notes that she will be moving to a firm with "better service." Regarding her duties to her employer, Nickoli most likely violated the Standards by:

Making preparations to leave the firm while still employed.
Disparaging her employer to clients prior to her resignation becoming effective.
Informing clients of her impending departure before notifying her employer.

Question 10 of 15

Ianetta, a chief compliance officer, oversees a transition to a new email archiving vendor. During the migration, there is a temporary period where historical emails are inaccessible. Additionally, the new system does not capture emails sent via third-party cloud-based platforms used by some employees, though it captures all internal server traffic. Regarding the Standard on Record Retention, Ianetta has most likely:

Complied, because the inaccessibility was temporary and unintentional during a necessary vendor upgrade.
Violated the Standard by failing to capture cloud-based emails, regardless of the server status.
Violated the Standard only if the temporary gap in access exceeded regulatory minimums.

Question 11 of 15

Kuznetsov, a portfolio manager, suspects his supervisor is pressuring him to favor proprietary products over client interests. To document this unethical behavior, he surreptitiously records conversations and copies relevant client records containing confidential information. He provides this evidence to the local regulator. His employer fires him for violating client confidentiality policies. Kuznetsov's actions are most likely:

A violation of the Standard regarding Preservation of Confidentiality.
A violation of the Standard regarding Loyalty to Employer.
Permissible under the Standards as a justified whistleblowing activity.

Question 12 of 15

Clemence resigns from her firm to join a competitor. Before leaving, she downloads an Excel file containing contact details for all the firm's clients, including those she did not personally manage. She intends to use this only to send a "thank you" note and update her contact info. She does not solicit them for business in these notes. Her action is most likely:

A violation of the Standard on Loyalty to Employers.
A violation of the Standard on Preservation of Confidentiality.
Permissible if she limited the list to only clients she personally managed.

Question 13 of 15

Harris, a CFO and CFA charterholder, discovers a severe design flaw in his company's new aircraft that could cause fatal crashes. The company is fixing it, but the information is not public. As a member of the employee retirement committee, he must vote on whether to keep company stock as an investment option. He knows the stock price will crash if the flaw is revealed. He votes to keep the stock option to avoid signaling the problem. Harris's action is most likely:

Appropriate because he maintained his duty of confidentiality to his employer.
Inappropriate because he failed to prioritize the interests of plan beneficiaries over the firm.
Inappropriate because he is effectively acting on material nonpublic information by not acting.

Question 14 of 15

Mikalev retires from a large bank but realizes his login credentials for the firm's premium market data and internal deal rooms remain active. He uses this access to monitor market trends for his personal knowledge but does not trade on any information found. Regarding the Code and Standards, Mikalev's use of these resources is most likely:

Acceptable because he did not trade or profit from the information.
Acceptable because the firm failed to revoke his access, implying permission.
Unacceptable because it constitutes misappropriation of the former employer's property.

Question 15 of 15

Webb leaves RSI. Her employment contract forbids soliciting clients for two years. She updates her personal LinkedIn profile to list her new employer. LinkedIn's algorithm automatically notifies her network, which includes many RSI clients. Several clients contact her, and she responds with her new contact info. Has Webb violated Standard IV(A)?

Yes, because the automated notification constitutes a passive solicitation in violation of her contract.
No, because updating a personal profile is a statement of fact, not a solicitation, and she did not trigger the notification manually.
Yes, because she responded to the clients who contacted her, which completes the solicitation loop.

STANDARD IV(B) - DUTIES TO EMPLOYERS - ADDITIONAL COMPENSATION ARRANGEMENTS

First Principles Thinking: Professional Integrity

First Principles Thinking: Hierarchy of Duties and Method of Correction

First Principles Thinking: Definition of Employment and Benefit

First Principles Thinking: The Right to Work

First Principles Thinking: Information as Property

First Principles Thinking: Intellectual Property and Work For Hire

First Principles Thinking: Agency and Duty of Loyalty

First Principles Thinking: Preparation vs. Active Competition

First Principles Thinking: Duty of Loyalty

First Principles Thinking: Scope of Record Retention

First Principles Thinking: Whistleblowing and Conflicting Duties

First Principles Thinking: Proprietary Information

First Principles Thinking: Fiduciary Duty vs. Confidentiality

First Principles Thinking: Misappropriation of Property

First Principles Thinking: Public Announcement vs. Solicitation