They are from Schweser. Im confused as Schweser answers are different from mine. 1. Ahmed Jamal, CFA, head of research for Valley Brokersm decided it was time to change his recommendation on D&R Company from buy to sell. he orally announced his decision during the Monday staff meeting and said his written report would be finished and disseminated to Valley’s customers by the middle of next week. As a result of this announcement, Doris Smith, one of Jamal’s subordinates, immediately sold her personal shares in D&R, and Martin Temple told his largest institutional customers of the change the following day. Which Standards have most likely been violated? A. Jamal violated Standard IV © Responsibilities of Supervisors; Smith violated Standard II (A) Material Nonpublic Information; and Temple violated Standard VI (B) Priority of Transactions. B. Jamal violated Standard IV © Responsibilities of Supervisors; Smith violated Standard VI (B) Priority of Transactions; and Temple violated Standard III (B) Fair Dealing. C. Smith violated Standard VI (B) Priority of Transactions; and Temple violated Standard III (B) Fair Dealing. 2. Which of the following is most likely a violation of Standard III (B) Fair Dealing? A. A firm makes investment recommendations and also manages a mutual fund. The firm rountinely begins trading for the fund’s account ten minutes before announcing recommendations changes to client accounts. B. After releasing a general recommendation to all clients, an analyst calls the firm’s largest institutional clients to discuss the recommendation in more detail. C. A portfolio manager allocates IPO shares to all client accounts, including her brother’s fee-based retirement account. 3. Mary Herbst, CFA, a pension fund maanger at GBH Investment, is reviewing some of FreeTime, Inc.'s pension fund activities over the past years. Which of the following actions related to Freeatime, Inc.'s pension fund is most likely to be a breach of her fiduciary duties? A. Paying higher than average brokerage fees to obtain research materials used in the management of the pension fund. B. Trading with selected brokers so that the brokers will recommend GBH’s managers to potential clients. C. Selectively choosing brokers for the quality of reseach provided for managing FreeTime’s pension. My answers are 1B 2A 3B. What do you think? Tks.
1B, 2B, 3A, You have the answers?
I would say: C A B
1 is B. Check schweser errata- the answer they posted was wrong but the explanation was right. 2 is A. Blatantly favoring the mutual fund there. B) is allowed b/c they released it to everyone but then follow up with their best & biggest clients, different levels of service is fine. I believe schweser’s answer letter was wrong here too but the explanation should be right. 3 is B. you can’t pick brokers based on that broker sending you new clients.
Anyone have the answers to these?
got them its B, B, C, I can see why you didnt get the answers, for the last one they say its C, but they then go on to say B was a breach, im not following
2 is B cos A is referring to priority of Transaction, and just because they are the biggest clients doesn’t mean they deserve special treatment, unless they explicitly say they are paying a higher fee for special service. Although they still let the other clients know, so im not sure realy
Thank you AndrewUNH, I didn’t check the Schweser Errata, however, like you said the explanations were right but the chosen choices were all wrong. It made me confused T__T Here are the answers from Schweser: 1. C. Jamal failed to properly supervise employees and provide adequate procedures and policies to prevent employee violations. Smith should not have traded her own account ahead of client accounts. Temple should not have disclosed the recommendation change selectively but should have informed his clients fairly and objectively. No inside information was used in the question. 2. B. This is not necessarily a violation. Firms can offer different levels of service to clients as long as this is disclosed to all clients. The largest institutional clients would likely be paying higher fees for a greater level of service. Also note that the analyst’s brother’s account in choice C should be treated the same as any other client account. 3. C. Standard III (A), Loyalty, Prudence, and Care. Herbts is acting as a fiduciary for the pension plan beneficiaries. Choosing brokers based on quality of services provided is reasonable. She may pay higher-than-average brokerage fees so long as doing so benefits the pension beneficiaries, not other clients. Trading with selected brokers solely to gain referrals is not likely to be in the pension beneficiaries’ best interest since it does not take into account other important factors for selecting brokerage firms. So the corrects choices should be 1B 2A 3B rite? Thank u guys!
- The answer is (B). Jamal has violated Supervisor’s responsibility, cause he failed to manage his subordinates that - Smith violated priority of transactions (first client, second firm, third personal) and Temple told his biggest clients about change in recommendation before the official dissemination. Also, all of them were acting on material non-public information. 2. The answer is (A) Clients must be treated fairly, thus dissemination of the information should be done simultaneously to ALL clients. Once the dissemination is done, you may provide superior services for additional fee. Phone call is an example. 3. The answer is (B). You should always look for best execution and lower fees for the CLIENTS. Selecting broker for recommendation would benefit the firm, but not the clients. This is a violation. (A) and (B) are ok, cause you are allowed to pay more for additional value brought to your CLIENTS with the research quality.
I’m still confused. I also think answers are B A B however first one is confusing. C might work as well, are you guys sure that Ahmad Jamal violated Standard IV © Responsibilities of Supervisor? Releasing information in a staff meeting before submitting to clients is a violation right?
Jamal failed to properly supervise employees and provide adequate procedures and policies to prevent employee violations. Therefore C does not work. Bilal Wrote: ------------------------------------------------------- > I’m still confused. I also think answers are B A B > however first one is confusing. C might work as > well, are you guys sure that Ahmad Jamal violated > Standard IV © Responsibilities of Supervisor? > Releasing information in a staff meeting before > submitting to clients is a violation right?
AndrewUNH Wrote: ------------------------------------------------------- > Jamal failed to properly supervise employees and > provide adequate procedures and policies to > prevent employee violations. Therefore C does not > work. > mm thing about ethics is you just have to make assumptions but thanks for your explanation makes sense now …
1.) C -> I think here is Schweser right. 2.) B -> I think here is Schweser also right. It could A, but the question is not to priority of transacitons in my opinion. 3.) Schweser says C but I think B is right!
cirlced those same ethic questions this morning, per Schweser errata: Schweser Study Notes UpdatesBook 1 Book 1 -Page: 79-81 - Correction Correct answers are: #16B #21A #24B. Answer explanations are correct. ( Posted: 2010-10-20)
1b 2a 3c
im fairly confident its B,A,B.
I think the first one is a bad question. We don’t have enough information to know for sure that Jamal committed a violation because his employees went off and traded after a staff meeting. I have seen lots of questions where your gut instinct tells you that there is a violation and there really wasn’t, this seems like one of those times.