Explanation:
Under the CFA Institute's Code of Ethics and Standards of Professional Conduct, Standard I(A): Knowledge of the Law requires members to understand and comply with applicable laws, rules, and regulations. When a member suspects a violation of securities laws or regulations, they have an obligation to take appropriate action.
Key points:
Correct approach: Report to supervisor/compliance, who can then investigate properly while maintaining confidentiality and following proper procedures.
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Jorge Fernandez, CFA, is an equity analyst at a brokerage company. He suspects his colleague is trading on shares prior to his research reports being distributed to clients. When Fernandez asks his colleague about it, he is told to mind his own business. To comply with the Standard relating to knowledge of law, Fernandez should most likely.
A
report his suspicions to his supervisor.
B
continue to observe his colleague's trades.
C
discuss his colleague's trades with other analysts at the firm.