Chartered Financial Analyst Level 1
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Amanda Covington, CFA, works for McJan Investment Management. McJan employees must receive prior clearance for personal investments as per the firm's compliance procedures. The clearance requires a written request specifying the security, quantity, and broker. Pre-cleared transactions are valid only for the trading day. Covington received prior clearance for two transactions but later purchased 250 shares of Stock B without clearance. Did Covington violate any CFA Institute Standards of Professional Conduct in this action?
Amanda Covington, CFA, works for McJan Investment Management. McJan employees must receive prior clearance for personal investments as per the firm's compliance procedures. The clearance requires a written request specifying the security, quantity, and broker. Pre-cleared transactions are valid only for the trading day. Covington received prior clearance for two transactions but later purchased 250 shares of Stock B without clearance. Did Covington violate any CFA Institute Standards of Professional Conduct in this action?
Explanation:
Explanation: Covington violated Standard VI(B) - Priority of Transactions by not following her employer's compliance procedures. The prior clearance process is designed to prevent conflicts of interest, and members are required to comply with their employer's policies. While option A is incorrect because she did violate the Standards, option B is incorrect as there is no evidence of a violation of Standard V(A) - Diligence and Reasonable Basis. The correct answer is C, as the violation pertains to non-compliance with the employer's procedures.