Ethics Flashcards
Do investment managers have to inform clients of portfolio manager compensation structure?
Yes, if the portfolio manager could be incentivised to deviate from the client’s investment strategy.
Is it a violation of the standards to say that as a CFA Charterholder you are committed to the highest ethical standards?
No.
When taking work product from a previous company with you to a new company, do you need permission from the old employer and from the person who developed the product?
No, the product belongs to the company and therefore that is the only permission you need.
If you are a long a stock and you purchase a call option on the stock with the expectation of increasing the stock price, is this market manipulation?
Yes.
Is realising losses on a position in order to reduce tax bill a violation?
No.
If a bank is underwriting an IPO, can it offer shares to the portfolio management department?
Yes - if it has already been offered to all the clients.
What are the three ROS recommendations regarding investment recommendations?
- A recommendation/ rating category (e.g. Strong Buy)
- A time horizon for the rating
- A risk rating
What are the ROS requirements and recommendations with regards to conflict disclosure?
Required - Disclose the conflicts in either the company website or supporting documents.
Recommended - Disclose conflicts in body of report.
When providing clients with the details of new valuation model, do you have to include all the details of the previous model?
No.
Under the ROS, what three things are required when making a public appearance?
- Disclose any shareholdings.
- Direct the viewers to the full report.
- Comment on the suitability of investment for viewers.
|s it a breach of the code and standards to suggest a recommendation that is contrary to your firm’s rating?
Yes.
Under the ROS, can you have a director that covers IB and investment management?
No.
Under ROS, is it a breach to trade against a firm’s recently published recommendation?
Yes - the individual and their immediate family cannot trade against recent recommendations unless they are experiencing extreme financial hardship
Under ROS, is it required/ recommended to provide a full copy of the relevant research report for free even if you would normally charge for it?
It is recommended but not required.
What is the recommended/ required frequency for publishing research reports on a company?
Required - On a timely basis.
Recommended - Quarterly.
