Q1. A firm has three accounts for which shares of an IPO are suitable. These three accounts have asset size of $2,500,000.00 (A), $3,500,000.00 (B), and $4,000,000.00 (C), and have given advance indications of interest for 2,000 shares, 1,000 shares, and 1,000 shares respectively. There are 1,000 shares available. All of the following allocations are acceptable EXCEPT:

A)    500 shares to A, 250 shares to B, and 250 shares to C.

B)    250 shares to A, 350 shares to B, and 400 shares to C.

C)    333 shares to A, 333 shares to B, and 333 shares to C.

Q2. Which of the following statements is FALSE? It is permissible under the Standards to allocate trades:

A)     on a pro rata basis over all suitable accounts.

B)     on a pro rata basis over all suitable accounts on the basis of an advance indication of interest and indicated order size.

C)     on a pro rata basis over all suitable accounts based upon account value.

Q3. When a firm seeks to allocate a disproportionate number of shares of a hot IPO to performance-based fee accounts this constitutes a violation of the Standard concerning:

A)    additional compensation arrangements.

B)    priority of transactions.

C)    fiduciary duty.

Q4. Alba Vasquez allocates trades of hot new IPOs as follows: m*p/(p+s) shares to performance-based fee accounts, m*s/(p+s) shares to standard fee accounts, where there are p suitable performance based fee accounts, s suitable standard fee accounts, and m shares available. This action is:

A)    not permissible since it effectively favors the performance-based fee accounts.

B)    permissible since it effectively amounts to a strict pro rata basis of allocation.

C)    not permissible since it is based upon a formula that is not inherently fair.

Q5. Concerning Standard III(B), Fair Dealing, which of the following statements is TRUE? The Standard:

A)   concerns the dissemination of investment recommendations and the taking of investment action.

B)   concerns the dissemination of investment recommendations but is not concerned with the taking of investment action.

C)   is not concerned with the dissemination of investment recommendations so long as the taking of investment action is inherently fair.

答案和详解如下：

Q1. A firm has three accounts for which shares of an IPO are suitable. These three accounts have asset size of $2,500,000.00 (A), $3,500,000.00 (B), and $4,000,000.00 (C), and have given advance indications of interest for 2,000 shares, 1,000 shares, and 1,000 shares respectively. There are 1,000 shares available. All of the following allocations are acceptable EXCEPT:

A)    500 shares to A, 250 shares to B, and 250 shares to C.

B)    250 shares to A, 350 shares to B, and 400 shares to C.

C)    333 shares to A, 333 shares to B, and 333 shares to C.

Correct answer is B)

Allocating shares on the basis of account size effectively discriminates on the basis of larger (i.e., favored) clients of the firm.

Q2. Which of the following statements is FALSE? It is permissible under the Standards to allocate trades:

A)     on a pro rata basis over all suitable accounts.

B)     on a pro rata basis over all suitable accounts on the basis of an advance indication of interest and indicated order size.

C)     on a pro rata basis over all suitable accounts based upon account value.

Correct answer is C)

Allocating trades on the basis of account value would inherently favor the firm’s largest clients, and is a violation of the standard. However, allocation on a pro rata basis, pro rata based upon order size (when there are too few shares to fill all orders, e.g., filling 2/3 of all orders actually submitted), or pro rata based upon an advance indication of interest are all permissible.

Q3. When a firm seeks to allocate a disproportionate number of shares of a hot IPO to performance-based fee accounts this constitutes a violation of the Standard concerning:

A)    additional compensation arrangements.

B)    priority of transactions.

C)    fiduciary duty.

Correct answer is C)

The allocation of a disproportionate number of shares to performance-based fee accounts constitutes a violation of fiduciary duty, in addition to being a violation of the Standard concerning fair dealing.

Q4. Alba Vasquez allocates trades of hot new IPOs as follows: m*p/(p+s) shares to performance-based fee accounts, m*s/(p+s) shares to standard fee accounts, where there are p suitable performance based fee accounts, s suitable standard fee accounts, and m shares available. This action is:

A)    not permissible since it effectively favors the performance-based fee accounts.

B)    permissible since it effectively amounts to a strict pro rata basis of allocation.

C)    not permissible since it is based upon a formula that is not inherently fair.

Correct answer is B)

The formula shown above is nothing more than a simple pro rata basis of allocation (assuming that the shares are then subsequently allocated in the same fashion over all of the sub accounts by category). Hence, this is permissible.

Q5. Concerning Standard III(B), Fair Dealing, which of the following statements is TRUE? The Standard:

A)   concerns the dissemination of investment recommendations and the taking of investment action.

B)   concerns the dissemination of investment recommendations but is not concerned with the taking of investment action.

C)   is not concerned with the dissemination of investment recommendations so long as the taking of investment action is inherently fair.

Correct answer is A)

Standard III(B), Fair Dealing is concerned with both the dissemination of investment recommendations and with the taking of investment action. It follows that this concern is irrespective of whether or not there has been a prior recommendation on the securities in question.