Alpha Advisors Inc is an investment management firm that has a client base that ranges from individuals to large foundations many of the firm;s personnel responsible for managing larger accounts feel that Alpha must give these accounts “special service” inorder to retain their business. Some of these employess have been responsible for developing and revising the firm’s policies over time. Converned that the policies might violate the CFA Institute Standards of Profesional Conduct, the president of Alpha has been reviewing the firm’s policies and procedures. Which of the following policies is least appropriate under the standards? Alpha: A. monitors the personal trading activity of firm personnel and requires them to pre-clear personal trades through the compliance office. B. attempts to minimize the time that elapses between when an investment decision is made and when it is released C. regularly calls larger accounts frist after changes in investment recommendations have been faxed to all clients D. exlcudes client accounts of family members of employees from participating in IPOs
D. Family members that are clients should be treated just like any other client. Another note on answer C. It is ok to call your largest clients first as long as the changes have already been disclosed to all clients.
instant clarification! thats exactly what i couldn’t figure out, if it was ok to call your bigger clients once the others had been notified.
definitely D is wrong under the standards, because even though they are family, they are a client account and should not be discriminated against. Violation of III(B) Fair Dealing.
Do we need to know the classifications? ie know the what the violation is (Violation of III(B) Fair Dealing)?
You do not need to know that IIIB = Fair Dealing…that will be supplied on the test but you do need to know what consists of a violation of Standard III B Fair Dealing
Got it! Thanks.
I have seen questions in June that had answer choices: a) No violation b) violation of Fair Dealing c) Violation of Suitability d) Violation of xxxx and a whole passage up there in “pure legalese” that made no sense… CP