88、Rajiv Singh, a CFA charterholder, works as an equity analyst with Horizon Investments, a large broker/dealer. After ski-resort developer HighLife misses a quarterly earnings target, Singh changes his recommendation on HighLife from buy to hold. Singh has been following HighLife for years. In several previous research reports on HighLife, Singh told clients that, based on his detailed analysis of the financial statements and market position, he believed HighLife had stopped picking up market share. He had mentioned concerns about HighLife several times in his reports and said in the most recent report that he would downgrade the stock if it missed quarterly earnings. Singh had produced his monthly report on HighLife just a week before the earnings announcement, and because he had just written about his intention to downgrade the stock, he felt he did not need to inform clients of his recommendation change until the next monthly report. On the same day that the HighLife report was released, Singh initiated coverage on another company, the convenience-store operator QuickStop, with a Buy rating. His research report is distributed that afternoon. A client sends Singh a sell order for QuickStop via e-mail the same day the new recommendation is being disseminated to all Singh’s clients and prospects. John Womack, a Level II CFA candidate, is a trader at Horizon. Womack, walking past the conference room during an investment meeting, learns of the initiation of the buy rating on QuickStop. Prior to the dissemination of the buy rating to Horizon’s clients, he buys up a large block of QuickStop shares for Horizon’s account in anticipation of clients’ interest in the stock. When the rating is released to the firm’s customers, he fills the incoming customer orders out of Horizon’s inventory, generating a modest profit for the company. Horizon is drafting trade-allocation guidelines for companywide use. Five regulations the company is considering are listed below: §
Regular orders are processed and executed on a pro-rata basis. §
Shares in initial public offerings will be allocated on a pro-rata basis to the firm’s portfolio managers according to advance indications of interest from the managers. §
When the full amount of a block order is not executed, partially executed orders are allocated on a first-in, first-out basis. §
Orders must be recorded in writing and stamped with the time of the order and the execution. §
All clients participating in block trades are give the same execution price, and all clients are charged the same commission. When Singh receives the sell order for QuickStop, he should: A) ask the client to delay the order until he sees the new research report. B) process the sell order immediately to fulfill his fiduciary duty to the client. C) tell the client about the buy rating and advise him not to sell the stock. D) delay answering the e-mail until the client has received the new research report. The correct answer was Standard III(B): Fair Dealing requires analysts to inform clients of rank changes before accepting the order. Delaying the order or asking a client to wait without explanation could violate the fair dealing Standard as well as the Standard relating to fiduciary duties. 89、Womack’s trading actions are a violation of: A) Standard III(E): Preservation of Confidentiality and Standard VI(B): Priority of Transactions. B) Standard IV(A): Loyalty to Employer and Standard III(B): Fair Dealing. C) Standard III(A): Loyalty, Prudence, and Care and Standard IV(A): Loyalty to Employer. D) Standard III(A): Loyalty, Prudence, and Care and Standard VI(B): Priority of Transactions. The correct answer was D) Womack’s actions violate the Standards related to fair dealing, priority of transactions, and fiduciary duties. 90、With regards to his coverage of HighLife stock, Singh: A) violated the research reports Standard because he failed to differentiate between facts and opinions. B) violated the insider-trading Standard by using nonmaterial, nonpublic information in forming his opinion of HighLife. C) violated the reasonable-basis Standard by downgrading a stock just because it missed one quarterly earnings estimate. D) did not violate the Standards for reasonable basis or research reports. The correct answer was D) Singh reported a series of facts that led him to draw a conclusion, and identified the conclusion as his own. No nonpublic information was used in the HighLife analysis. And while Singh did say that missing an earnings target would spur a downgrade, he made it clear that he had broader concerns about the firm’s market share. Missing an earnings target would simply be confirmation of his concerns, and thus be the catalyst to his change of opinion. 91、After Singh changed his investment recommendation for HighLife from a “buy” to a “hold,” he violated: A) Standard V(A): Loyalty, Prudence, and Care by not exercising reasonable care and prudent judgment in his research. B) Standard I(C): Misrepresentation by not exercising diligence and thoroughness in his research. C) Standard III(B): Fair Dealing by not telling clients about the downgrade of HighLife in the wake of his promise to downgrade the stock if it missed estimates. D) Standard III(C): Suitability because he did not consider the needs of individual clients. The correct answer was C) A change in stock rating is always material, and must always be disclosed to clients. Thus, Singh violated Standard III(B). Singh did not violate a fiduciary duty to his clients because he did not put anyone’s interest above theirs. As an analyst, Singh’s job is to assess the appeal of an investment, not make investment decisions for individual accounts. As such, he did not violate Standard III(C). Standard I(C) relates to misrepresenting qualifications or guaranteeing investment returns, and is not relevant to this situation. 92、Horizon’s proposed IPO-allocation procedures are: A) a violation of Standard: Loyalty, Prudence, and Care and Standard VI(B): Priority of Transactions. B) not a violation of Standard I(B): Independence and Objectivity. C) not a violation of Standard III(B): Fair Dealing if they are disclosed to all clients and prospects. D) a violation of Standard III(C): Suitability, but not of Standard ) III(A): Loyalty, Prudence, and Care. The correct answer was B) Independence and objectivity has not been violated. According to Standard III(B), allocation of new issues according to advance indications of interest should be done on a pro-rata basis by client, rather than by portfolio manager. Therefore Horizon’s policy is not fair and equitable. Disclosure of this inequitable allocation method does not relieve Horizon of its obligation that the allocation method be fair and equitable. While the policy may violate fiduciary duty as required by Standard III(A), it does not violate either Standard III(C), which addresses investment suitability, or Standard VI(B), which relates to the priority of transactions. 93、Which of the following trade allocation procedures being considered for Horizon’s trade allocation policy would NOT be consistent with Standard III(B), Fair Dealing? A) All clients participating in block trades are give the same execution price, and all clients are charged the same commission. B) When the full amount of a block order is not executed, partially executed orders are allocated on a first-in, first-out basis. C) Regular orders are processed and executed on a pro-rata basis. D) Orders must be recorded in writing and stamped with the time of the order and the execution. The correct answer was B) All orders should be allocated on a pro-rata basis based on order size, not on a first-in, first-out basis. The other regulations satisfy the fair-dealing Standard. 94、Sheila Stevens, CFA, has accepted a one-year gift membership (valued at approximately $225) to the Women’s World Health Club from a firm to which she directs trades. She has done so without notifying her employer. Which of the following statements are FALSE? A) This is a violation of the Code and Standards, because the gift is not a token amount. B) This is a violation of the Code and Standards, because it has not been disclosed to her employer. C) This is a violation of the Code and Standards, because the intent appears to be to gain influence over Stevens. D) This is a violation of the Code and Standards but is less serious than an identical case in which the gift was given by a client of Stevens. The correct answer was D) This action is clearly a violation of Standard I(B), Independence and Objectivity. Accepting a gift from a non-client is a more serious violation than accepting a gift from a client (for which a compensation arrangement would already exist), since the intent is almost certainly to gain influence over future actions of the member (e.g., increased allocation of trades). | 
发表于 2008-4-8 16:09
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