A money management firm has the following policy concerning new recommendations: When a new recommendation is made, each portfolio manager estimates the likely transaction size for each of their clients. Clients are notified of the new recommendation in the order of their estimated transaction size—largest first. All clients have signed a form where they acknowledge and consent to this allocation procedure. With respect to Standard III(B), Fair Dealing, this is: A) not a violation because the clients are aware of the policy. B) a violation of the standard. C) not a violation because the clients have signed the consent form. D) not a violation because this policy qualifies as a pro rata procedure for disseminating information.
i’d say A
It’s B. Although they are aware it is still not a fair policy.IMHo
B As an aside, did anybody notice how different the CFAI mock exam ethics questions were? A lot of questions along the lines of: Mr Smith does something and buys something yada yada yada. Which of the following Standards is he least likely to have violated? A. Standard IIIB Fair Dealing B. Stadard IVA Loyalty C. Standard VIC Referral Fees D. Standard IC Misrepresentation a much tougher way of testing Ethics I thought than Schweser at least
Yup … schweser says B. Though I thought there could be different service levels based on payments.
Yep, B. It’s more like the fundamental of ‘fair dealing’.
Service levels apply after you treated everybody fairly. You can give extra service to some clients, but you can’t favor any client in detriment of another. When you give investment advice, you must always send it to all clients at the same time. You can call some by phone after you sent everyone the info by fax, and that would be an acceptable difference in service levels. But never give info to some clients first.
BUMP The point here is that you can offer enhanced services, but only in the manner that allows everyone who is willing to participate in them, a chance to. So distributing that information (enhanced service level) to all clients allows those same clients to choose whether or not to get the added benefits of it versus the additional costs likely to be inured. Good question.
Thank-you. I surely would have given the incorrect A answer. or C…
cfacowtown thanks for the daily ethics refresher, much appreciated
Hey Guys, I am a Newbie.I have recently appeared in my final year exams(B.COM,it’s a 3year college degree program) and would like to register for the CFA JUNE’10 LEVEL 1 exam.I don’t have any work experience whatsoever.I know that the registrations for the JUNE’10 exam shall immense after the JUNE’09 exam.Now,i would request u guys to enlighten me on the registration process and enrollment eligilbilty.I have 3 questions for u :- 1.)Does my university graduation degree(3yrs)qaulifies as a degree equivalent to U.S. bachelor’s degree? 2.)As mentioned above,i don’t have any work experiance,Can i still register for the exam? 3.)I don’t have a credit card,Can i use my cousin’s credit card for registration,but then the SHIPPING address and the BILLING address will be different,wouldn’t that be a problem? Guys,Please help. Thanx