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Offering premium levels of service to certain clients (without disclosing these premium services and making them available to all clients) is a violation of Standard III (B): Fair Dealing, but not Standard I (D): Misconduct.
Michaels has violated the Standard concerning:
Responsibilities of Supervisors by failing to implement reasonable procedures to detect violations.
Compliance with the Global Investment Performance Standards least likely requires firms to:
include all fee-paying and non-fee-paying accounts in at least one composite.
It is most likely that Woods has violated the Standard regarding:
Matt O'Neill, CFA, is an advisor for Century Investments, a retail financial services firm. Century has a firmwide policy that its advisors recommend the firm's own investment products to clients unless Century does not offer a product suitable for the client's needs. Can O'Neill follow his firm's policy without violating the Code and Standards?
Yes, if O’Neill discloses this policy to his clients.
Patricia Nelson, CFA, is informed by one of her clients that if she can get the performance of the client firm’s pension portfolio above that of the Standard & Poor’s average by year-end, the client will give her a free trip to Singapore to visit the firm’s offices. If Nelson agrees to this arrangement, which of the following actions complies with CFA Institute Standards of Professional Conduct? Nelson:
may inform her employer by email of this agreement and must receive written consent.
Peter Wellington has changed his status in marketing materials to “Level III CFA candidate.” Wellington passed the Level II CFA exam and just received his results. He intends to register for the next Level III CFA examination that is offered the following June. Wellington has:
violated the Standard on reference to the CFA Institute, the CFA Designation, and the CFA Program.
Ron Brenner, CFA, manages portfolios for individuals. One of his clients, John Perlman, offers Brenner several inducements above those provided by his employer to motivate superior future performance in managing his portfolio. Brenner notifies his manager via e-mail about the terms of this offer, and his employer grants permission. According to the Standard on additional compensation arrangements, Brenner:
has taken all the actions required to accept the arrangement.
Moe Girard, CFA, works in a large group that decides on recommendations by consensus. Girard does not always agree with the group consensus, but he is confident in the group's analytical ability. To comply with the Code and Standards when the group issues a recommendation with which he disagrees, Girard:
does not need to take any action.
Ralph Malone, CFA, has many clients, including a trust account that benefits three of his immediate family members. His firm changes its recommendation on a stock from “hold” to “buy” on a security that is suitable for many clients, including the trust. Which of the following would be considered a violation of the Standard concerning priority of transactions?
Malone waits until after the firm purchases the security to buy it for the family trust account
Sean Jones places an order with his investment advisor Lisa Johnson, CFA, to buy 1,000 shares of Orkle Incorporated. Johnson's firm makes a market in Orkle and she executes the trade through her own firm. According to the Code and Standards, Johnson should:
disclose her firm’s market making activities to Jones.
Adam Schute, CFA, is on a conference call with the CFO of an investment banking client with his phone speaker on and his door open. As a result, salesmen and traders overhear the CFO describing problems with production target dates that have not been publicly disclosed. The salesmen relay this information to clients and the traders reduce their positions in the stock. With respect to the Standard on material nonpublic information, Schute has:
violated the Standard because he should have taken steps to prevent the dissemination of the information.
Carlos Mendez, CFA, is beginning an investment advisory relationship with a new client and plans to formulate an investment policy statement (IPS) for the client. According to the Standard concerning suitability, Mendez is least likely to consider the client's:
conflicts of interest.
While visiting Cassori Company, Mark Ramsey, CFA. overhears management make comments that are not public information but are not really meaningful by themselves. Combining this information with his own analysis and other outside sources, Ramsey decides to change his recommendation on Cassori from “Buy” to “Sell.” According to the CFA Institute Standards of Professional Conduct, Ramsey:
may issue his “Sell” report because the facts are nonmaterial, but should maintain a file of the facts and documents leading to this conclusion.
Anderson has violated the Standard on: