Ethical And Professional Standards - Ethical And Professional Standards Section 1
- Option : A
- Explanation : According to Standard IV(C) Responsibilities of Supervisors, a member or candidate should decline in writing to accept supervisory responsibilities until reasonable compliance procedures are laid down by a firm for her to assume and exercise responsibility.
- Option : C
- Explanation : Crawford doesn’t own the same securities as his clients therefore he least likely violates Standard VI(B) Priority of Transactions. He violates Standard VI(A) Disclosure of Conflicts by failing to inform his clients of the change in his compensation arrangement with his employer which causes a conflict between his compensation and the clients’ IPS. He violated III(C) Suitability because high-yield bonds are not suitable for his risk-averse clients.
- Option : C
- Explanation : Standard III(A) Loyalty, Prudence and Care has been violated because Toffler did not place his clients’ interests before his employer’s interests. Standard VI(B) Priority of Transactions has been violated. Toffler would have avoided the conflict by waiting until his clients had the opportunity to receive and assimilate Gates’ report. The report was sent out to all clients at the same time; hence Standard III(B) Fair Dealing is not violated.
- Option : B
- Explanation : Standards IV(A) Loyalty and IV(C) Responsibility of Supervisors have been violated since both the supervisor and compliance officer did not investigate Sonali’s concerns. There is no evidence of misrepresentation.
- Option : C
- Explanation : No violation has occurred. It is acceptable to share past performance as long as a clear disclaimer is provided that this performance was achieved at another firm.
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