In a situation where a contract clause conflicts with a stricter local law, which CFA Standard requires compliance with the stricter law?

• A. A I(A) Knowledge of the Law
• B. B IV(A) Loyalty, Prudence, and Care
• C. C III(A) Loyalty, Prudence, and Care
• D. D I(D) Misconduct

Answer: (A)

The driving idea here is that you must follow applicable law, even when a contract would push you to do otherwise. CFA Institute's Standard I(A) Knowledge of the Law requires a member or candidate to understand and comply with all laws and regulations governing their professional activities. If a contract clause conflicts with a stricter local law, the legal requirement governs and supersedes the contract terms. This protects you and clients from illegal or noncompliant actions and reflects prudent, lawful conduct in professional practice. In practice, you would adhere to the stricter local law, documenting the conflict and seeking guidance if needed.