Supervision and Ethical Duty of Compliance Officers

Hard Cfa Institute Code And Standards Employer Duties - Supervision

The CFA Institute Code of Ethics and Standards of Professional Conduct outlines specific responsibilities that members and candidates have towards their employers, particularly regarding supervision and oversight of their duties. Consider a scenario where an investment firm’s compliance officer has been informed about potential unethical behavior by one of the junior analysts. The compliance officer, overwhelmed with other tasks, delays taking action on this information for several weeks. This situation raises important questions about the standard of care expected from individuals in supervisory roles.

Based on the CFA Institute’s ethical guidelines, which of the following actions by the compliance officer is most consistent with the ethical duty to supervise?

The compliance officer promptly reports the potential unethical behavior to the firm's management to initiate an investigation.

The compliance officer decides to wait until the junior analyst's performance improves before addressing the potential unethical behavior.

The compliance officer instructs the junior analyst to document his activities without addressing the reported concerns.

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