CFA Practice Question

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CFA Practice Question

A manager enters into a soft dollar agreement with a brokerage firm to provide both brokerage and research services to aid in the investment process. Which of the following are not required for compliance with CFA Institute's soft dollar standards?

I. disclosure of soft dollar arrangements to clients
II. determination of whether the research provided meets Standard III(A) Loyalty, Prudence, and Care
III. obtaining the best execution on behalf of clients
Correct Answer: II only

User Contributed Comments 11

User Comment
shasha I don't believe any one of the three answers is not requried by CFA Institute. The note ("The Standard" part, under 4.2) clearly says research provided must meet Standard III(A). Do I get misunderstanding?
LogicMan I believe II is not required. The brokerage firm should not try to determine at all.
cbb1 The manager does not have to determine that the brokerage firm is independent and objective under III A.
kulla I guess the manager has to determine the quality of research reports as pointed out by shasha
tengo The client should receive a benefit from the research purchased by brokerage over a reasonable period of time. If the research was faulty the client would not receive a benefit.
StanleyMo soft dollar standards does not mention on determining whether research provided meets Standard III(A).
prajacti USE of the research should meet std III A
Gooner7 "Investment mgr is responsible for determining if research is CFA-Institute standard" it specifically states in the reading. Call me crazy, but to be "CFA-institute standard," it would have to meet any of the standards? No?
gill15 seems kind of weird doesn't? doesnt mention determing whether meets the standards but the use should meet it?

How do you use the research without determining if it meets the standard?
johntan1979 This question is referring to CFA Institute's Soft Dollar Standards:

Not once was Standard III(A) mentioned in the entire document.
raffrobb Great comments and discussion, after reviewing and reading question carefully, II is crystal clear best answer
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