CFA Practice Question

There are 291 practice questions for this study session.

CFA Practice Question

Which of the following is false?

A. A broker recruits clients for his brokerage firm but does not disclose to them that he receives a commission for successful referrals. He has not committed any violation.
B. An analyst refers clients to her firm's personal financial-planning division. She receives a commission for successful referrals. She has violated the Standard for conflict of interest.
C. An investment manager directs trades for a client to a brokerage that does not provide best execution, but does provide research that is used for investment decision making process. This has not been disclosed to the client. The investment manager has not violated the Soft Dollar Standards.
Correct Answer: C

The broker can be expected to receive a commission for bringing in business to his brokerage. However the clients may not know that the analyst will receive a commission for recommending them to another part of the firm. Soft dollar standards require the manager to disclose benefits received through client brokerage.

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