Question

Jenna Mitchel works as the head of research at a large investment management company. Recently she received her CFA charter and is also given the responsibility of compliance. She delegates some of her supervisory responsibilities in the research unit so she can bring the compliance in line with the CFA Institute Standards of Professional Conduct as directed by CEO.

Which of the following statement is correct according to CFA Code and Standards?

i. Mitchel has supervisory responsibilities over all her subordinates.

ii. Mitchel is not responsible for her subordinates who are not governed by the CFA Code and Standards.

iii. Mitchel responsibilities now only involve the Compliance unit since she has delegated responsibilities in the Research Unit.

Are all her subordinates subject to Code and Standards? Explain.

Answer 1

According to the CFA Code and Standards, Jenna Mitchel, as the head of research at a large investment management company, has supervisory responsibilities over all her subordinates, regardless of whether they are governed by the CFA Code and Standards or not. She is still responsible for ensuring compliance across the entire organization, including both the Compliance and Research Units.

Step-by-step explanation:

According to the CFA Code and Standards, Jenna Mitchel, as the head of research at a large investment management company, has supervisory responsibilities over all her subordinates, regardless of whether they are governed by the CFA Code and Standards or not. Therefore, statement (i) is correct.

Since Mitchel is responsible for compliance, she needs to ensure that all her subordinates, including those in the Research Unit, adhere to the CFA Institute Standards of Professional Conduct. Therefore, statement (ii) is incorrect.

Regarding statement (iii), Mitchel's delegation of some supervisory responsibilities in the Research Unit does not mean that her responsibilities now only involve the Compliance Unit. She is still responsible for ensuring compliance across the entire organization, including both units.

In conclusion, based on the CFA Code and Standards, all of Jenna Mitchel's subordinates, regardless of which unit they belong to, are subject to the Code and Standards and she has supervisory responsibilities over all of them.