Q19. The method that Nagle uses to allocate the IPO issues to his clients is:

A)   a violation of the standards on fair dealing.

B)   not a violation of the standards because Nagle discloses the practice to his clients.

C)   a violation of the standard on soft dollars.

Q20. Nagle’s standing order to purchase as much as much as possible of each Presley Brothers’ IPOs is a violation of the standard because:

A)   Nagle should get advanced notice of his clients’ interest in the IPO.

B)   Nagle is, in effect, distributing soft dollars.

C)   of no reason, it is actually an acceptable practice because all the IPOs have been profitable.

Q21. Nagle has violated the standards on research objectivity by:

A)   his standing order for IPOs but not by his using only Presley Brothers investment products.

B)   his only using Presley Brothers investment products but not by his standing order for IPOs.

C)   his standing order for IPOs and his using only Presley Brothers investment products.

Q22. With respect to the trip that Nagle has been taking each year Nagle:

A)   should disclose it to his clients because it could represent a conflict of interest and hinder his objectivity.

B)   should disclose it to his clients because it provides him with information about stock market activities other than those of Presley Brothers.

C)   does not need to disclose it to his clients because it provides him with valuable information.

Q23. Being able to offer his clients discount commissions on option trades after generating a certain amount of commissions is:

A)   not a violation because it is a benefit that all clients can share in if they so choose.

B)   a violation because commissions on option trades are the quintessential soft dollars.

C)   a violation because it benefits those clients who are inclined to do option trading.

答案和详解如下：

Q19. The method that Nagle uses to allocate the IPO issues to his clients is:

A)   a violation of the standards on fair dealing.

B)   not a violation of the standards because Nagle discloses the practice to his clients.

C)   a violation of the standard on soft dollars.

Correct answer is A)

Nagle needs to give all of his clients an opportunity to participate in profitable deals. In Nagle’s current system, it is possible for long-time clients who generate a consistent level of business per year to never be able to participate in a profitable IPO.

Q20. Nagle’s standing order to purchase as much as much as possible of each Presley Brothers’ IPOs is a violation of the standard because:

A)   Nagle should get advanced notice of his clients’ interest in the IPO.

B)   Nagle is, in effect, distributing soft dollars.

C)   of no reason, it is actually an acceptable practice because all the IPOs have been profitable.

Correct answer is A)

The standard on Trade Allocation: Fair Dealing and Disclosure requires that Nagle get an advanced indication of client interest.

Q21. Nagle has violated the standards on research objectivity by:

A)   his standing order for IPOs but not by his using only Presley Brothers investment products.

B)   his only using Presley Brothers investment products but not by his standing order for IPOs.

C)   his standing order for IPOs and his using only Presley Brothers investment products.

Correct answer is C)

Nagle is not doing any research on the IPOs before taking the allocations. Apparently, taking the trips has led to Nagle limiting his choices of possible products for his clients. Nagle needs to be more thorough in researching the needs of his clients.

Q22. With respect to the trip that Nagle has been taking each year Nagle:

A)   should disclose it to his clients because it could represent a conflict of interest and hinder his objectivity.

B)   should disclose it to his clients because it provides him with information about stock market activities other than those of Presley Brothers.

C)   does not need to disclose it to his clients because it provides him with valuable information.

Correct answer is A)

Nagle’s objectivity has clearly been compromised since he has started only using Presley Brothers’ products. The clients need to be aware that a significant portion of Nagle’s information is coming from the one firm that executes his trades and provides all of his clients’ products.

Q23. Being able to offer his clients discount commissions on option trades after generating a certain amount of commissions is:

A)   not a violation because it is a benefit that all clients can share in if they so choose.

B)   a violation because commissions on option trades are the quintessential soft dollars.

C)   a violation because it benefits those clients who are inclined to do option trading.

Correct answer is C)

Clearly some of Nagle’s clients will benefit from this arrangement more than others.

thanks

thanks

thx