Page 271, Q2, concerning Pankow’s selection of seminar leaders. Which standard was violated and why? Page 271, Q3, concerning Pankow’s response, where in the reading does it state that a trustee’s fiduciary duty is evaluated only as of the date the investment decisions are made and not afterward as well? Isn’t a fiduciary duty evaluated throughout? See page 264, lead paragraph, which states, "The trustee is under a duty … to invest and MANAGE (emphasis added) the fund of the trust as a prudent investor would…
Don’t have my book in front of me but for Q3 they are probably getting at the “no monday morning quarterback” type rule…you are only evaluated for making the best investment decision on that date, not after the fact.
Do you understand #2? You can’t select your own clients/brokers as speakers to generate positive business for FHI. And you can’t post exam problems on a blog…
I get that it doesn’t sound good. But I can’t put my figure on which specific standard is being violated and why. AndrewUNH Wrote: ------------------------------------------------------- > You can’t select your own > clients/brokers as speakers to generate positive > business for FHI.
haha i dunno the conflicts of interest one for the speakers thing, and then violating CFA candidate conduct standards or something for the other
For Q2, I think the violation is to Standard VII–responsibilites as a CFA (p139-140)… the violation come from “improperly using an assocation with CFA Institute to further personal or professional goals.” --it’s a position as a CFA society member, and she’s exerting her position to get professional gain by only using her own clients and brokers. For Q3, look on p258, “His compliance with these duties is judged as of the time an investment decision is made, and not with the benefit of hindsight or subsequent developments, no on the outcome of his investment decisions.” It’s basically saying that as long as you having the reasonable basis at the time of the transaction, that unexpected outcomes don’t violate your fiduciary responsibility. It’s an on-going process, but as long as you exercise prudent care, you won’t be accountable for something unforeseeable.
As to Q2, I guess you’re correct, but it certainly isn’t obvious from the reading on page 140 (and the examples that follow) that this is what is intended. As to Q3, I found the cite after my original post, (it’s actually in section 8, page 267). While this is obviously the correct answer, it’s not the intuitive one. It suggests, “hey, your fiduciary responsibility ends after the trades placed.” Its like, where else in 3,099 pages of Level II curriculum would you not reevaluate an investment decision as new facts come to light? SeesFA Wrote: ------------------------------------------------------- > For Q2, I think the violation is to Standard > VII–responsibilites as a CFA (p139-140)… the > violation come from “improperly using an > assocation with CFA Institute to further personal > or professional goals.” > --it’s a position as a CFA society member, > and she’s exerting her position to get > professional gain by only using her own clients > and brokers. > > > For Q3, look on p258, “His compliance with these > duties is judged as of the time an investment > decision is made, and not with the benefit of > hindsight or subsequent developments, no on the > outcome of his investment decisions.” > It’s basically saying that as long as you > having the reasonable basis at the time of the > transaction, that unexpected outcomes don’t > violate your fiduciary responsibility. It’s an > on-going process, but as long as you exercise > prudent care, you won’t be accountable for > something unforeseeable.
Robert, it’s not saying that. In spirit, it’s just saying you’re accountable to make the prudent decision at the time of transaction. If time passes and you re-evaluate the portfolio, and then you know it’s no longer suitable, you have a duty to adjust; but you will not be held accountable for something unforeseeable and/or unexpected changes. The point is, you can’t be sued for poor results alone. Your fiduciary responsibility matters at the time of execution–not what happens during those next few months. Nobody can manage and evaluate every account continuously. If something changes making an investment no longer suitable, then there is a new situation for a transaction need at that time of re-evaluation.
I get it. I was at the very end of Ethics, having studiously read essentially all 270 mind-numbingly boring pages and was a little irritated that the rules aren’t a little more clear cut.
I feel your pain, hang in there!! The “story problem” type EOC are brutal. I’m so glad to be done reviewing them for Ethics.