CFA Practice Question

There are 291 practice questions for this study session.

CFA Practice Question

Which of the following statements is recommended with regard to personal investing?

I. restrictions on participation in an IPO of equity or equity-related securities
II. preclearance of all trades
III. disclosure of all holdings in which the employee has a beneficial interest
A. II and III
B. I and III
C. I, II and III

User Contributed Comments 14

User Comment
Rguerra II is wrong: personal trading is ok if there is absolutely no conflict of interest, the security is not owned by any client and it is not on the restricted lists of the company.
froglee But in the notes, it said "Pre-clearance procedures, Investment professionals should clear all personal investments to identify possible conflicts before the execution of all personal trade" So doesnt that mean II is right in this question??
anricus I agree with froglee
nike "should clear all personal investments to identify possible conflicts": I think clear here does not mean you cannot own any personal investment. You should make sure they don't incur any conflicts of interest. Agree with Rguerra.
wollogo I agree with froglee. There is no problem with owning personal investments but any trading must be precleared by the compliance officer because there is always potential for conflict of interests. The trader is not in the best position to make this decision.
sunilcfa i think that is what is meant by "preclearance"
motoloco from the book....In conflict of interest, priority of transactions, recommended procedures for compliance:
"Investment personnel slould clear all personal investments to identify conflicts....." it does not mentiont any exception....
I agree II is also correct
treakj Clearance means permission, verification
bmeisner The question asks for "recommended procedures." Preclearance is clearly a recommended compliance procedure. It is not required however.
HenryQ The truth is that even non covered people working at IBs need to get preclearance for any trade.
apguil14 Agree w/bmeisner. It is a "recommended compliance procedure", and yes this is normal practice for IB's and many other financial institutions.
gazza77 1 is incorrect as there is no restriction on participating in IPO, just oversubcribed IPO's
Shaan23 It's recommended not required for answer II. That is dirty tricky.
rjdelong Bmeisner hits it on the head, most of you missed this and are arguing because you overlooked the word RECOMMENDED.
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