Ethics fair dealing management, concerning, allocation, first

Chuckrox8

A money management firm has the following policy concerning new recommendations: When a new recommendation is made, each portfolio manager estimates the likely transaction size for each of their clients. Clients are notified of the new recommendation in the order of their estimated transaction sizelargest first. All clients have signed a form where they acknowledge and consent to this allocation procedure. With respect to Standard III(B), Fair Dealing, this is:
A) not a violation because the clients are aware of the policy.
B) a violation of the standard.
C) not a violation because the clients have signed the consent form.
D) not a violation because this policy qualifies as a pro rata procedure for disseminating information.

jmh530

i’d say A

Bad5shah

It’s B. Although they are aware it is still not a fair policy.IMHo

bodhisattva

Yup .. schweser says B. Though I thought there could be different service levels based on payments.

justin88

Service levels apply after you treated everybody fairly. You can give extra service to some clients, but you can’t favor any client in detriment of another.
When you give investment advice, you must always send it to all clients at the same time. You can call some by phone after you sent everyone the info by fax, and that would be an acceptable difference in service levels. But never give info to some clients first.

LorrinCFA

cfacowtown
thanks for the daily ethics refresher, much appreciated