A firm claims to adhere to ethical standards but lacks staff training.

• A. Standard IV.E Preservation of Confidentiality
• B. Standard V.A Diligence and Reasonable Basis
• C. Code of Ethics and Standards
• D. Standard VII.A Conduct as a CFA Institute Member or Candidate

Answer: (C)

Ethical compliance isn’t something claimed, it’s something practiced through proper training, policies, and oversight. The Code of Ethics and Standards provides the overarching framework that defines how all CFA professionals and their firms should behave and how they must implement governance to ensure ethical conduct. When a firm says it adheres to ethical standards but lacks staff training, it reveals a gap between the commitment and the actual ability to meet those standards in day-to-day operations. Without training, employees may misinterpret or overlook requirements, leading to potential breaches in areas like confidentiality, professional judgment, and overall standards of conduct.

The other options point to specific rules or to individual behavior, not the broad organizational obligation to uphold ethics through a formal program. Confidentiality, diligence based on a reasonable basis, and conduct by members or candidates are important facets, but they don’t address the fundamental need for an organization-wide ethical framework and training that the Code of Ethics and Standards establish.