My attempt at what you must know about Ass Man _________________________________________________________ Six components to the Asset Manager Code (1) Loyalty to Clients, (2) Investment Process and Actions, (3) Trading, (4) Compliance and Support, (5) Performance and Valuation, and (6) Disclosures. Ethical responsibilities: • Always act ethically and professionally. • Act in the best interest of the client. • Act in an objective and independent manner. • Perform actions using skill, competence, and diligence. • Communicate accurately with clients on a regular basis. • Comply with all legal and regulatory requirements. Loyalty to Clients • Salary to align interests with client without the manager taking undue risks. • Policy for collecting, using and storing confidential client information. policy does not preclude disseminating necessary information to legal authorities in the event of an investigation. • Creating an anti-money-laundering policy to detect and help prevent firms from being used for money laundering or other illegal activities. • Define a token gift and allowing only token gifts from outside business relationships. • Cash should never be accepted, and employees should always notify their supervisor in writing when they accept any gifts. Investment Process and Actions • Never engage in market manipulation of security prices. • Deal fairly with all clients when disseminating information, making recommendations, and placing trades. • Thoroughly investigate and research different investment options to have a reasonable basis for a recommendation. • Have different levels of service and products available to all clients as long as they are fully disclosed. • Analyze and understand the different investment options available and can also rely on third party research with verification. • Stress test complex derivative products. • Be able to explain the investment strategies to clients so they can understand and assess suitability. • Disclose and get client agreement on change to an investment strategy. When no agreement, allow to cash out without any penalties. • Must have an IPS. IPS to be reviewed at least annually and to include appropriate BM. • Investment recommendations to be made in the context of the client’s total assets, even though only a portion may be placed with the manager. Trading • Firewalls between different departments (e.g. research and IB) • Disseminating information to a small group of individuals does not constitute making the information public. • Allowed to use the mosaic theory • Procedures to ensure that client trades are given higher priority • Employees to seek prior approval for investing in IPOs or private placements, creating restricted watch lists of securities that are owned or that will be traded by clients • Employees to provide quarterly information regarding their own personal trades. • Soft dollar commissions. Managers should disclose to clients the soft dollar arrangements and how they aid the manager in the investment decision-making process. • Best execution. If the client directs trades through a particular broker, the manager should notify clients and seek acknowledgement from them that they may not be receiving best execution. • Fair treatment. Block trades or allocations on a pro rata basis to all interested and suitable clients. • Trading policies for initial public offerings and private placements should be explicitly stated. Compliance and Support • Documentation that ensures adherence to the Code, along with internal controls and self assessment mechanisms. • A compliance officer who reports directly to the CEO or board of directors and responsible for making sure compliance procedures are in place and followed. • The compliance officer is also responsible for employee training related to compliance procedures and policies and on-going self evaluations. • They should also review employee trading practices to ensure client trades are placed before employee trades. • The compliance officer should also provide a copy of the Code to all employees and document that the employees have read and understand the Code. • The compliance officer investigates any misconduct involving compliance issues and works with management on disciplinary measures. • Companies should develop contingency plans, also called disaster-recovery planning or business-continuity planning. Contingency plan to include: o Off-site backup for all client accounts. o Back-up plans to continue operations (e.g., trading, researching, and monitoring of investments). o Procedures to continue communication with employees, clients, suppliers, and vendors. • Have an independent third party review of portfolio assets. • Records should be kept for a minimum of six years unless otherwise required by local laws or regulations. Performance and Valuation • Fair and accurate reporting investment results without misrepresentation. • Any hypothetical models should be fully disclosed. • GIPS recommended • To avoid conflict of interest, procedures for valuing asset accounts should include asset valuations by an independent third party. • Readily accepted valuation techniques to be used on a consistent basis. Disclosures • Communicate with the client on a timely basis in an understandable manner without misrepresentation • Disclose to the client any information enable to make an informed decision regarding the manager, the organization, investment options or the process. • Disclose potential conflicts of interest such as soft or bundled commissions, referral fees, sales incentive programs, brokerage arrangements, and stocks held by clients also held by employees. • Any regulatory disciplinary actions taken against the manager or his organization • The investment decision-making process and strategies, including inherent risks associated with a particular strategy or investment. • Returns both gross and net of fees, the fee schedule, a projection of fees charged, and make available upon request an itemized list of actual costs and fees. • A discussion of any soft or bundled commissions, how those commissions are being spent, and the benefits to the client. • Performance of the client’s account at least quarterly and within 30 days of the end of the quarter. • The method used to determine the value of the client’s assets. • Proxy voting policies of the manager. • How shares of stock are allocated. • The results of any audits performed on the client’s account or fund
You’re the man!
• Records should be kept for a minimum of six years unless otherwise required by local laws or regulations. this is wrong shuns I think
wake2000 Wrote: ------------------------------------------------------- > • Records should be kept for a minimum of six > years unless otherwise required by local laws or > regulations. > > this is wrong shuns I think Nope, this is correct dood.
six years is correct in Ass Man 2011
WOW ! 22April , less than 15 days back. I bet at least 75% of Lvl 3 candidates haven’t seen this
pfcfaataf Wrote: ------------------------------------------------------- > www.cfainstitute.org/Eratta/2011_level_III_errata_ > as_of_22APRIL.pdf > > see Reading 6 bullet point Oh snap. Watch them put that in the actual exam. 90% of the candidates end up getting it wrong.