- CFA Exams
- CFA Level I Exam
- Study Session 1. Ethical and Professional Standards
- Reading 3. Guidance for Standards I-VII
- Subject 8. Standard III (B) Fair Dealing
CFA Practice Question
An investment manager only has a small block of shares from a "hot" IPO. What is the best way for him to allocate this block according to the Standards of Professional Conduct on Fair Dealing?
A. Allocate these shares pro-rata to all client portfolios for whom the issue is appropriate.
B. Allocate a large portion of the shares to institutional clients and a small share to the individual clients.
C. Allocate all the shares to the firm's institutional clients.
Explanation: Regarding an issue that is oversubscribed or a "hot" IPO, all clients should be given a pro rata share of the over-subscription. The member himself should not take up the issue, in order to free up some of the oversubscribed shares.
User Contributed Comments 1
| User | Comment |
|---|---|
| gyee2012 | III Duties to Clients B. Fair Dealing - fairness to all accounts - analysis, investment recc, invest actions, prof activities |