A member secretly uses a client's funds for personal expenses without consent. Which standard is violated?

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Prepare for the Chartered Financial Analyst (CFA) Ethics Test. Study with flashcards and multiple choice questions, each with hints and explanations. Get ready for your exam!

Multiple Choice

A member secretly uses a client's funds for personal expenses without consent. Which standard is violated?

Explanation:
Using client funds for personal expenses without consent breaches the fiduciary duty owed to clients. This kind of misappropriation is a form of misconduct, which CFA Institute defines as actions that reflect poorly on a member’s integrity or discredit the profession, including theft or fraud. It goes beyond simply providing false statements (misrepresentation) or dealing unfairly with clients; it also isn’t about insider information. So the behavior violates Misconduct.

Using client funds for personal expenses without consent breaches the fiduciary duty owed to clients. This kind of misappropriation is a form of misconduct, which CFA Institute defines as actions that reflect poorly on a member’s integrity or discredit the profession, including theft or fraud. It goes beyond simply providing false statements (misrepresentation) or dealing unfairly with clients; it also isn’t about insider information. So the behavior violates Misconduct.

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