Q3. With regards to the Flimflam stock, the Code was:

A)   not broken.

B)   broken when Jung purchased Flimflam shares for herself, but not when she purchased the shares for Yeats or when Yeats tipped her off about Flimflam.

C)   broken when Jung purchased Flimflam for herself, and when she purchased Flimflam for Yeats, but not when Yeats tipped her off about Flimflam.

Q4. With regards to Babel Brokerage, Westmoreland Financial:

A)   can comply with the Code only if it receives permission from clients.

B)   can comply with the Code only if it switches a different brokerage.

C)   is in compliance with the Code.

Q5. How many items on Westmoreland’s disclosure policy are insufficient to satisfy the Code?

A)   3.

B)   1.

C)   2.

答案和详解如下：

Q3. With regards to the Flimflam stock, the Code was:

A)   not broken.

B)   broken when Jung purchased Flimflam shares for herself, but not when she purchased the shares for Yeats or when Yeats tipped her off about Flimflam.

C)   broken when Jung purchased Flimflam for herself, and when she purchased Flimflam for Yeats, but not when Yeats tipped her off about Flimflam.

Correct answer is A)

A speech at a fund-raiser is most likely a public event. When a reporter is there, the issue of disclosure is moot, regardless of whether the reporter thought to write about the business news. Yeats’ tip is legitimate, and barring any rules about preauthorization, of which we have no knowledge, Jung’s purchase of Flimflam shares for Yeats, then afterward for herself, seems ethically sound.

Q4. With regards to Babel Brokerage, Westmoreland Financial:

A)   can comply with the Code only if it receives permission from clients.

B)   can comply with the Code only if it switches a different brokerage.

C)   is in compliance with the Code.

Correct answer is C)         

While the use of Babel Brokerage may not look good, the holy grail of brokerage is best pricing and execution. If clients are receiving the best service possible, the fact that William Westmoreland’s nephew owns the company does not put Westmoreland Financial in violation of the Code. However, the firm would be wise to either switch brokerages or disclose the relationship to clients and receive permission.

Q5. How many items on Westmoreland’s disclosure policy are insufficient to satisfy the Code?

A)   3.

B)   1.

C)   2.

Correct answer is C)         

Returns should be presented both gross and net of fees. Legal disclosure should include information about action taken against the firm. The other three statements satisfy the Code.

thx