RE: Item Set Questions on Mock Exam. Jacaranda and Athena Case

Jacaranda: 1. from the text. “Jacaranda’s independent research contractor, Mathew Ochieng, who does not have access to the company’s server. Ochieng, who only undertakes research for Jacaranda, send his research reports to the head of research, who then archives these electronic copies.” My question is how does the firm prevent the independent reserach contractor from front running clients in the firm (because he makes recommendation and can trade beforehands)?

  1. from the answer key for question #4, I read that independent research contractor, Mathew Ochieng, “provides research only for Jacaranda, he wouldn’t necessarily be considered as a third-party research provider”, but I can’t find the text that supports this statement. Additionally, what are the rules that govern an independent researcher, especially about record retentions?


Regarding question # 6, choice B, what should be included in the disclosure of the firm’s risk management process, according to the Asset Manager Code of Professional Conduct?



Athena#6, Schweser is missing this: “plans for contacting and communicating with clients during a period of extended disruption”. It is stated in the corriculum. We should remember.


Disclose the following:

Conflicts of interests generated by any relationships with brokers or other entities, other client accounts, fee structures, or other matters. Regulatory or disciplinary action taken against the Manager or its personnel related to professional conduct. The investment process, including information regarding lock-up periods, strategies, risk factors, and use of derivatives and leverage. Management fees and other investment costs charged to investors, including what costs are included in the fees and the methodologies for determining fees and costs. The amount of any soft or bundled commissions, the goods and/or services received in return, and how those goods and/or services benefit the client. The performance of clients’ investments on a regular and timely basis. Valuation methods used to make investment decisions and value client holdings. Shareholder voting policies. Trade allocation policies. Results of the review or audit of the fund or account. Significant personnel or organizational changes that have occurred at the Manager. Risk management processes.

Yes…we should remember

  • adequate backup, preferably off-site, for all account information;

  • alternative plans for monitoring, analyzing, and trading investments if primary systems become unavailable; - plans for communicating with critical vendors and suppliers; - plans for employee communication and coverage of critical business functions in the event of a facility or communication disruption; and - plans for contacting and communicating with clients during a period of extended disruption.

Mathew’s research was backed up-not by him but by head of research. So why this is a violation?