A senior portfolio manager is promoted to supervise three portfolio managers. The firm has no written supervisory policies and procedures. According to the Standards of Practice Handbook, what is the most appropriate course of action for her?

• A. Require the firm to adopt the CFA Institute Code of Ethics and Standards of Professional Conduct.
• B. Require the employees she supervises to adopt the CFA Institute Code of Ethics and Standards of Professional Conduct.
• C. Decline to accept supervisory responsibility until the firm adopts procedures to allow her to exercise such responsibility.
• D. Resign from the supervisory role.

Answer: (C)

The key idea is that oversight depends on having documented supervisory policies and procedures. A supervisor cannot effectively supervise without clear rules for monitoring, reviewing, and enforcing compliance. When a firm lacks these controls, taking on supervisory responsibility would expose clients and the firm to risk and place the supervisor in an impossible position.

Therefore, the most appropriate action is to decline to accept the supervisory role until the firm establishes written procedures that enable proper supervision—covering who oversees what, how trades and decisions are reviewed, how issues are escalated, and how compliance is enforced. This approach protects clients and aligns with the Standards’ expectation that firms implement appropriate supervisory controls before supervision begins. It’s not about forcing the Code on others or resigning; it’s about ensuring the framework is in place so supervision can be effective.