Question

Identify 3 (three) specific CFAI standards that were likely breached by the financial institutions in the case of 'The Lehman Brothers Bankruptcy'. Justify your answer.

Answer 1

The three specific CFAI standards that were likely breached by the financial institutions in the Lehman Brothers bankruptcy case are Professionalism, Duties to Clients, and Duties to Employers. These breaches include lack of oversight, emphasis on short-term gains over risks, and failure to provide adequate attention to operational details.

Step-by-step explanation:

Three specific CFAI (Chartered Financial Analyst Institute) standards that were likely breached by the financial institutions in the case of the Lehman Brothers bankruptcy are:

1. CFAI Standard I: Professionalism - The lack of oversight by the Board of Directors and the emphasis on short-term gains without considering the risks exemplify a breach of the professionalism standard. Professionals in the industry are expected to act in the best interests of their clients and exercise due care.
2. CFAI Standard III: Duties to Clients - Failing to provide adequate oversight and attention to the details of the operations of Lehman Brothers can be seen as a breach of the duty to clients. This standard requires professionals to act diligently, exercise loyalty, and put their clients' interests first.
3. CFAI Standard IV: Duties to Employers - The lack of oversight and failure to maintain the integrity of the organization's financial reporting systems may constitute a breach of the duty to employers. This standard emphasizes the importance of accuracy, fairness, and transparency in financial reporting.