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CFA Level 1 Exam

3959 Questions

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Question No. 1

Andrea, a portfolio manager for XYZ Investment Management Company, a registered investment organization

that advises investment companies and private accounts, was promoted to that position three years ago.
Bates, her supervisor, is responsible for reviewing Andrea's portfolio account transactions and her required
monthly reports of personal stock transactions. Andrea has been using Jonelli, a broker, almost exclusively for
portfolio account brokerage transactions. For securities in which Jonelli's firm makes a market, Jonelli has
been giving Andrea lower prices for personal purchases and higher prices for personal sales than Jonelli gives
to Andrea's portfolio accounts and other investors. Andrea has been filing monthly reports with Bates only for
those months in which she has no personal transactions, which is about every fourth month. Which of the
following applies/apply?
I. Andrea violated the Code and Standards in that she failed to disclose to her employer her personal
transactions.
II. Andrea violated the Code and Standards by breaching her fiduciary duty to her clients.
III. Bates violated the Code and Standards by failing to enforce reasonable procedures for supervising and
monitoring Andrea in Andrea's trading for her own account.
Choose the correct option from the given list.
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