Jarrod , CFA is a portfolio manager at ABC who has beneficial interest in the account that he manages for his parents. He discloses to his employer his beneficial interest in his parents’ account and follow the firm preclearance and reporting requirement for all transactions related to that account. He is careful to undertake transactions in the account only after his clients and employer have had an adequate apportunity to act. with respect to managing his parents’ account , has he vialated the standard?
A:no
B:yes, with respect to duties to clients
C:yes, with respect to duties to employer
the correct choice is A.
But my question is that why choice A is right. He shouldn’t treat his parents account just like other normal clients account. if He is careful to undertake transactions in the account only AFTER his clients and employer this can be a vialation of standards.作者: ap0258 时间: 2013-4-17 19:55
Look closer at the your answer choices
I see what you are saying in that he has violated his cuty to his client(s) who are his parents, but if hee were to treat their account as any other rather than put it last on the list his actions could be seen as preferential or could be construed as coming about from a conflict of interest which would be a different violation of the Professional Standards.
“Jarrod” is taking reasonable steps to ensure that his employer doesn’t accuse or raise suspicion that he may be giving his parents preferential treatment.
I see what you are saying though it is a rather grey area. I’ve taken the exam once, and I’m almost positive I recognize this situational problem for the exam so know/remember that answer!作者: AndyNZ 时间: 2013-4-17 19:55
Thanks Steve, now the question makes complete sense. The wording that is used will definitely trip a person up.作者: siavosh 时间: 2013-4-17 19:56
Oh yeah it’s all about the wording.
“He is careful to undertake transactions in the account only after his clients and employer have had an adequate apportunity to act”
perfect example of tricky wording.
For those of you using the Schweser guides rather than the CFAI books, I would recommend you crack the CFAI book ethics section and read through the scenarios they present for each professional standard. Many of these scenarios are almost guarnteed to show up on the exam with few minor changes.
The CFAI books may be long and cumbersome when explaining topics, but Ethics (I believe) is only about 160 pages, and a lot of that is optional reading. Definately worth reviewing.作者: towardsutopia21 时间: 2013-4-17 19:56
Im not an ethics champ but I would say that since he has interest and control, it is treated as his accounts would be treated. If he had no interest but control, he would be violating resp. to clients.作者: atate2007 时间: 2013-4-17 19:56
i’d have also said B myself but after reading the explanations it makes sense why A is the answer. great advice about reading the CFAI books for the ethics section. i used Schweser only but now i’ll go back to the original. thanks!作者: prav_Cfa7 时间: 2013-4-17 19:56
Thanks guys.
This is a question from CFAI books, end of the chapter Q33.
