Reading 2-III: Standards of Professional Conduct & Guida

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Q11.An analyst goes straight from a research seminar to a meeting with a prospective new client with whom she has never been in contact. The analyst is very excited about the information she just received in the seminar and begins showing the prospect the new ideas her firm is coming up with. This is most likely a violation of:

A) Standard III(B), Fair Dealing.

B) Standard III(C), Suitability.

C) both of these.

Q12.An analyst meets with a new client. During the meeting, the analyst sees that the new client’s portfolio is heavily invested in one over-the-counter stock. The analyst has been following the stock and thinks it will perform well in the long run. The analyst arranges through a brokerage firm to simultaneously sell a large number of shares of the stock via a series of cross trades from the new client’s portfolio to various existing clients. He arranges the trades to be executed at a price that approximates the current market price. This action is:

A) a violation of Standard III(A), Loyalty, Prudence, and Care.

B) a violation of Standard III(B), Fair Dealing.

C) not in violation of the Standards.

Q13.Which of the following would be a violation of Standard III(B), Fair Dealing?

A) Trading for regular accounts before discretionary accounts.

B) Having well defined guidelines for pre-dissemination.

C) Limiting the number of employees privy to recommendations and changes.

Q14.All of the following are violations of Standard III(B), Fair Dealing, EXCEPT a member:

A) places a trade for the firm account before issuing a buy recommendation.

B) telephones clients in distant cities the day after a buy recommendation is mailed to all clients because their mail service is later than the member's local clients.

C) places a trade for her discretionary accounts before placing a trade for her non-discretionary accounts.

Q15.All of the following are violations of Standard III(B), Fair Dealing, EXCEPT a member:

A) places a trade for the firm account before issuing a buy recommendation.

B) telephones clients in distant cities the day after a buy recommendation is mailed to all clients because their mail service is later than the member's local clients.

C) places a trade for her discretionary accounts before placing a trade for her non-discretionary accounts.