CFA Practice Question

CFA Practice Question

Jessica Morrison is the head of research at Peterson and Jameswood Securities. She often releases her reports to the portfolio managers of the firm who can trade for the firm's largest clients first. Jessica has ______
A. violated no standard, as the largest clients of the firm expect the best and most favorable service (since they give a large volume of business to the firm).
B. violated Standard VI (B) - Conflicts of Interest - Priority of Transactions by favoring certain clients.
C. violated Standard III (B) - Fair Dealing by favoring certain clients.
Explanation: Jessica has violated the Fair Dealing Standard, as she is required to treat all clients fairly, without putting any at a disadvantage. By releasing information that will first benefit some of the firm's largest clients, she has diluted the value of her report, as smaller clients may have to trade at prices which already reflect the information contained in the report.

User Contributed Comments 5

User Comment
kfly Could the anwer also be B since the question directly mentions priority of trading?
nike not B as it deals with client vs member. This questions deals with some clients vs other clients.
ontrack important clarification Nike! thanks.
aniketcpp Isn't answer be "A" .There may be differences in types of services provided to some clients ?as per standard, that is valid.
thebkr7 @Aniketcpp
Yes I believe that you are right only if it was declared that there were different tiers of service to be paid for, but this was not specified.
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