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Legal Compliance & Ethical Standards Flashcards

7 cards from real CFA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Legal Compliance & Ethical Standards flashcards as text

  1. The RICO Act (Racketeer Influenced and Corrupt Organizations) allows civil plaintiffs who prevail in a RICO claim to recover:

    Answer: Treble damages and attorney's fees

    Civil RICO plaintiffs are entitled to three times their actual damages (treble damages) plus reasonable attorney's fees if they prove a pattern of racketeering activity.

  2. Which element is NOT required to prove common law fraud?

    Answer: Proof that the defendant was previously convicted of fraud

    Common law fraud requires a false representation, scienter, intent to induce reliance, justifiable reliance, and resulting damages — prior convictions are not an element.

  3. A compliance officer who identifies a potential FCPA violation by a sales team operating in Southeast Asia should FIRST:

    Answer: Conduct a preliminary internal inquiry to assess the scope before deciding next steps

    Best practice calls for an initial internal assessment to understand the scope and facts before determining whether voluntary disclosure or other action is appropriate.

  4. The Fraud Enforcement and Recovery Act (FERA) of 2009 expanded the False Claims Act to include fraud involving:

    Answer: Any federally funded program or contract, including TARP funds

    FERA broadened False Claims Act coverage to reach fraud in any program receiving federal funds, including TARP and other emergency stimulus programs.

  5. When a CFE provides expert witness testimony, their primary duty is owed to:

    Answer: The court and the truth

    Expert witnesses, including CFEs, owe their paramount duty to the court — they must provide honest, objective opinions regardless of which side retained them.

  6. Under Dodd-Frank, an employee who is retaliated against for reporting securities violations to the SEC can file a complaint within:

    Answer: 6 years of the retaliatory act

    Dodd-Frank whistleblower retaliation claims must be filed in federal court within 6 years of the retaliatory act, or 3 years after the employee knew or reasonably should have known.

  7. The 'reasonable person' standard in fraud ethics and compliance is used to evaluate:

    Answer: What an objective, prudent professional in similar circumstances would have done

    The reasonable person standard measures conduct against what an objective, similarly situated professional would have known, done, or recognized — not the subjective beliefs of the individual.