Reading4: The Consultant －LOS a, b ~ Q23-26

investment, management, banking, second, black

Q23. Williams and Fudd is a major London-based brokerage and investment banking firm. Heritage Group, a money management firm, is the first, second, or third largest holder of each of the securities listed on Williams & Fudd's "PrimeShare #10" equity security list.

Williams and Fudd faxed a preliminary copy of a research update bulletin on Yeshe Corp to Heritage at 7 a.m. on Wednesday the 23^rd. The report, a change from a "hold" to a "strong buy", was released to the public at 11 a.m. Between 11:00 and 11:20 a.m., Heritage executed a series of trades with which they bought 1.25 percent of Yeshe's publicly traded stock. This action is:

A) a violation of the Standard concerning priority of transactions, but would conform if Heritage had waited at least 48 hours after the report was issued.

B) a violation of the Standard concerning fair dealing.

C) in accordance with the CFA Institute Code and Standards.

Q24. Marc Feldman, a CFA Institute member, is treasurer of zippy.com, and is also Larry Goldman's boss. Feldman is informed of "accounting irregularities of an unknown origin" during an audit by zippy's external accounting firm. There are 3 individuals, including Goldman, handling the accounting function. According to the Code and Standards, Feldman should do all of the following EXCEPT:

A) conduct a thorough investigation of activities.

B) leave the staff in their current jobs and increase supervision while the external auditors complete their work.

C) terminate the accounting staff immediately and issue a press release describing the situation.

Q25. All of the following would be effective components of a formal compliance system EXCEPT:

A) all managers must obtain client information to prepare an investment policy statement for each client.

B) investment managers may use soft dollars for the payment of research services, travel, meals, and lodging.

C) the firm has a duty to vote all proxy statements in the best interests of plan participants and beneficiaries.

Q26. Mark Vernley, CFA, is the owner of an engineering consulting firm called Energetics, Inc., which consults on asset and project valuations in energy-related industries. The firm currently employs 10 professional engineers. Vernley wants to develop and implement adequate compliance procedures for his firm to avoid potential conflicts of interest. Which of the following statements is least likely to represent an appropriate compliance procedure dealing with conflicts of interest. Employees at Energetics are required to:

A) deal fairly and objectively with all clients and prospects when providing consultation on asset and project valuations.

B) certify annually that they have maintained familiarity with the compliance procedures and agree to abide by them.

C) report, in writing, on a quarterly basis all securities transactions for their personal portfolios and those in which they have a beneficial interest.

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发表于 2009-1-7 09:08 | 只看该作者

答案和详解如下：

A) a violation of the Standard concerning priority of transactions, but would conform if Heritage had waited at least 48 hours after the report was issued.

B) a violation of the Standard concerning fair dealing.

C) in accordance with the CFA Institute Code and Standards.

Correct answer is B)

This action, by giving preferential treatment in the dissemination of investment recommendations and material changes to a favored client, is a violation of Standard III(B) concerning fair dealing.

A) conduct a thorough investigation of activities.

B) leave the staff in their current jobs and increase supervision while the external auditors complete their work.

C) terminate the accounting staff immediately and issue a press release describing the situation.

Correct answer is C)

Standard IV(C) spells out responsibilities of supervisors in the Standards of Practice Handbook. Since the investigation is ongoing, it would clearly be inappropriate to terminate the entire accounting staff until their complicity in the wrongdoing is established.

Q25. All of the following would be effective components of a formal compliance system EXCEPT:

A) all managers must obtain client information to prepare an investment policy statement for each client.

B) investment managers may use soft dollars for the payment of research services, travel, meals, and lodging.

C) the firm has a duty to vote all proxy statements in the best interests of plan participants and beneficiaries.

Correct answer is B)

The Securities and Exchange Act of 1934, Section 28(e), contains a “safe harbor” provisions allowing investment managers to use soft dollars for research purposes only. Thus, soft dollars represent dollars paid for investment research and cannot be used for items such as travel, meals, and lodging.

A) deal fairly and objectively with all clients and prospects when providing consultation on asset and project valuations.

B) certify annually that they have maintained familiarity with the compliance procedures and agree to abide by them.

C) report, in writing, on a quarterly basis all securities transactions for their personal portfolios and those in which they have a beneficial interest.

Correct answer is A)

Standard III(B) – Fair Dealing requires members to deal fairly and objectively with all clients and prospects. Of the statements presented, dealing fairly and objectively with clients is least likely to be a compliance procedure dealing with conflicts of interests. The other statements involve compliance procedures dealing with conflicts of interests.

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