Some more ethics questions ...

I hope people don’t flame me for posting so many … Below are a few Schweser ethics questions … 1. Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. He places trades for the fund with Worldwide Brokerage. Worldwide is holding a conference in Amsterdam and has offered to pay for Calaveccio’s airfare, meals, and accommodations associated with his attendance of the conference. The conference concerns European small cap securities and the EASDAQ. He decides that he will accept their offer and attend the conference. In order to comply with the Code and Standards, he: A) may attend, but he must disclose the arrangement to TrustCo’s clients and prospects as required under Standard IV.B. B) may attend, but he must disclose the arrangement to his employer as a gift. C) should not attend unless he pays for the trip himself. 2. A government committee has concluded that investment company fees should be disclosed to clients each quarter and has proposed new legislation to require this. Currently, the legal requirement is to report such data annually. In compliance with current legal requirements, Dolphin Investments discloses its fees annually. Eugene Shin, CFA, Dolphin’s compliance officer, learns of the proposed changes but does not convert Dolphin’s reporting to a quarterly basis. Shin’s decision not to act: A) constitutes professional misconduct as defined in the Code and Standards. B) is not a violation of the Code and Standards. C) is a violation of his duty to employer as defined in the Code and Standards. 3. The SEC’s new stock-trading rule has just gone into effect. The SEC will give brokers a 10-day grace period, during which violators of the rule will be immediately notified and given a chance to remedy their situation to comply with the new rule. If a CFA Institute member unknowingly violates the rule and then remedies the situation within the 10-day grace period, has the member violated Standard I(A)? A) No, because the member remedied the situation. B) No, because the member unknowingly broke the rule. C) Yes, because the member did not maintain knowledge and know of the rule. 4. Lawrence Kelly is the Chief Investment Officer at a money management company that claims it is in compliance with CFA Institute Soft Dollar Standards. For the first time, the company has purchased securities in the country of Santa Rosa. He learns that under Santa Rosen law, one of the company’s soft dollar policies is forbidden, yet to conform with the law, Lawrence would have to violate the Soft Dollar Standards, but not the Standards of Professional Conduct. Lawrence: A) must follow the Santa Rosen Law and cease claiming compliance with CFA Institute Soft Dollar Standards. B) should follow the Santa Rosen Law and can still claim compliance with CFA Institute Soft Dollar Standards. C) must follow the CFA Institute Soft Dollar Standards, informing the Santa Rosen regulators of his reasons. Cheers :slight_smile:

A B C (i’m assuming they were ‘unkowning’ because they never knew the rule in the first place which is a violation). A?

A C B ( because of “just” gone into effect) A

  1. C 2) A 3) C 4) A I am unsure of that the last…

A - since the co offering is a broker hence requirement for soft dollar C - knowingly violates a law B - unknowingly A - must follow the stricter law can someone confirm the correct answers?

Whenever someone posts ethics you know they are going to be tricky and/or nit picky. Funfunfun. I am going to go: C B C B 1.) C - Could be A, but I am going to go C since Toronto to Amsterdam, airfare, meals, accommodations, hash bars, hookers… it seems excessive and could easily create a conflict re: best execution. Therefore he should decline or pay for the girls himself. 2.) B - Complies w/ current legal requirement. If new legislation passes then go for it. 3.) C - Regardless of any grace periods, standard requires knowledge, understanding and compliance w/ the law. 4.) B - Could be A or B… Has to comply w/ stricter requirement. I am going to say B he can still claim compliance if he discloses the requirement to comply w/ local law. But I can’t remember if that is the procedure, so that is a toss up.


The Schweser answers are 1. C 2. B 3. C 4. B slouiscar you got everthing right, congrats.


Explanation pls?

sparty419: Please see Slouiscar explanations above. They are the same as Schweser explanations. 1. Clearly if he has public transport available, he should pay for his trip and fly on his own 2. It is still in proposal, not a law yet. 3. Once a law comes into effect, a professional is supposed to know it. He shouldn’t need 10 day grace period. Not knowing the law, the day it comes into effect is Standards violation. 4. Thats how soft dollars standards are defined.

Wow. I am feeling awful darn ethical right now. Maybe I should pass on that new intern?

slouiscar Wrote: ------------------------------------------------------- > Wow. I am feeling awful darn ethical right now. > > Don’t worry, it will pass soon.