CAIA - Ethics - Standards IV, V and VI Flashcards Preview

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Flashcards in CAIA - Ethics - Standards IV, V and VI Deck (37)
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1

Standard IV (Duties to Employers) covers 3 areas:

 

1.

2.

3.

Standard IV (Duties to Employers) covers 3 areas:

 

1. Loyalty

2. Additional Compensation

3. Responsibilities of Superiors

2

Members and candidates (are/are not) obligated to forgo personal responsibilities for employers.

Members and candidates are not obligated to forgo personal responsibilities for employers.

3

Clients (should/should not) take precedence over employers.

Clients should take precedence over employers.

4

Members and candidates are (encouraged/required) to provide a copy of the Code of Standards to employers.

Members and candidates are encouraged to provide a copy of the Code of Standards to employers.

5

Employers (are/are not) obligated to adhere to the Code of Standards.

Employers are not obligated to adhere to the Code of Standards.

6

Members and candidates (can/can not) take up an independent practice that may conflict with the employer.

Members and candidates can not take up an independent practice that may conflict with the employer.

7

Members and candidates (can/can not) arrange to begin taking up an independent practice.

Members and candidates can arrange to begin taking up an independent practice.

8

Members and candidates who wish to start and independent practice (do/ do not) need to first get their employer's consent.

Members and candidates who wish to start and independent practice do need to first get their employer's consent.

9

Members and candidates (may/may not) petition clients to move business to a new place of employment.

Members and candidates may not petition clients to move business to a new place of employment.

10

Members and candidates (may/may not) procure documents for use at a new employer without consent.

Members and candidates may not procure documents for use at a new employer without consent.

11

Members and candidates who have started working at another firm (may/may not) contact former clients.

Members and candidates who have started working at another firm may contact former clients.

12

Departing employees covered by the Protocol for Broker Recruiting (may/may not) use client information at their new firm. They (can/cannot) give that information to other employees at the new firm.

Departing employees covered by the Protocol for Broker Recruiting may use client information at their new firm. They cannot give that information to other employees at the new firm.

13

If the interests of clients or general public need to be protected, members and candidates (would/would not) be breaching the duty of loyalty by informing on their employer.

If the interests of clients or general public need to be protected, members and candidates would not be breaching the duty of loyalty by informing on their employer.

14

There (is/is not) a distinction between the duty of loyalty for employees vs independent contractors.

There is a distinction between the duty of loyalty for employees vs independent contractors.

15

A ___ policy defines whether or under what conditions an employee may undertake independent practice.

competition policy defines whether or under what conditions an employee may undertake independent practice.

16

A ___ policy describes the processes related to resignation.

termination policy describes the processes related to resignation.

17

___ ___procedures address how a firm handles reporting of potential legal or ethical breaches.

Incident reporting procedures address how a firm handles reporting of potential legal or ethical breaches.

18

Standard ___ states that "Members and Candidates must not accept gifts, benefits, compensation, or consideration that competes with or might reasonably be expected to create a conflict of interest with their employer's interest unless they obtain written consent from all parties involved.

Standard IV(B) states that "Members and Candidates must not accept gifts, benefits, compensation, or consideration that competes with or might reasonably be expected to create a conflict of interest with their employer's interest unless they obtain written consent from all parties involved.

19

Standard ___ states that "in matters related to their employment, Members and Candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer."

Standard IV(A) states that "in matters related to their employment, Members and Candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer."

20

Members and candidates (must/should) provide a written report to their supervisor and compliance officer with the terms of (any/some) agreement(s) under which they propose to receive additional compensation.

Members and candidates must provide a written report to their supervisor and compliance officer with the terms of any agreement under which they propose to receive additional compensation.

21

Standard ___ states that "Members and Candidates must make reasonable efforts to detect and prevent violations of applicable laws, rules, regulations, and the Code and Standards by anyone subject to their supervision or authority."

Standard IV(C) states that "Members and Candidates must make reasonable efforts to detect and prevent violations of applicable laws, rules, regulations, and the Code and Standards by anyone subject to their supervision or authority."

22

Those members/candidates with oversight responsibilities over a large staff (may/may not) delegate supervisory responsibility.

Those members/candidates with oversight responsibilities over a large staff may delegate supervisory responsibility.

23

Supervisors (can/cannot) offer incentives to reward employees for ethical behavior.

Supervisors can offer incentives to reward employees for ethical behavior.

24

Establishing ethical procedures (is/is not) always sufficient to satisfy the supervisory standard.

Establishing ethical procedures is not always sufficient to satisfy the supervisory standard.

25

If members or candidates cannot fulfill supervisory responsibilities due to an inadequate or nonexistent compliance system, they should:

If members or candidates cannot fulfill supervisory responsibilities due to an inadequate or nonexistent compliance system, they should decline in writing to accept supervisory responsibility until reasonable procedures are established.

26

Standard V (INVESTMENT ANALYSIS, RECOMMENDATIONS, AND ACTIONS) of the Code of Ethics covers 3 areas:

 

1.

2.

3.

Standard V (INVESTMENT ANALYSIS, RECOMMENDATIONS, AND ACTIONS) of the Code of Ethics covers 3 areas:

 

1. Diligence and reasonable basis

2. Communication with Clients and Prospective Clients

3. Record Retention

27

Standard ___ states that "Members and Candidates must:

 

1. Exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations, and taking investment actions.

 

2. Have a reasonable and adequate basis, supported by appropriate research and investigation for any investment analysis, recommendation, or action."

Standard V(A) states that "Members and Candidates must:

 

1. Exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations, and taking investment actions.

 

2. Have a reasonable and adequate basis, supported by appropriate research and investigation for any investment analysis, recommendation, or action."

28

Standard ___ "COMMUNICATIONS WITH CLIENTS AND PERSPECTIVE CLIENTS states that "Members and Candidatees must:

1. Disclose to clients and prospective clients the basic format and general principles of the investment processes they use to analyze investments, select securities, and construct portfolio and must promptly disclose any changes that might materially affect those processes.

2. Use reasonable judgment in identifying which factors are important to their investment analyses, recommendations, or actions and include those factors in communications with clients and prospective clients.

3. Distinguish between fact and opinion in the presentation of investment analyses and recommendations.

Standard V(B) COMMUNICATIONS WITH CLIENTS AND PERSPECTIVE CLIENTS states that "Members and Candidatees must:

1. Disclose to clients and prospective clients the basic format and general principles of the investment processes they use to analyze investments, select securities, and construct portfolio and must promptly disclose any changes that might materially affect those processes.

2. Use reasonable judgment in identifying which factors are important to their investment analyses, recommendations, or actions and include those factors in communications with clients and prospective clients.

3. Distinguish between fact and opinion in the presentation of investment analyses and recommendations.

29

Use of leverage (must/should) be disclosed.

Use of leverage must be disclosed.

30

Standard ___ states that "Members and Candidates must develop and maintain appropriate records to support their investment analyses, recommendations, actions, and other investment related communications with clients and prospective clients."

Standard V(C) states that "Members and Candidates must develop and maintain appropriate records to support their investment analyses, recommendations, actions, and other investment related communications with clients and prospective clients."

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