CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Anderb, a portfolio manager for XYZ Investment Management Company, a registered investment organization that advises investment companies and private accounts, was promoted to that position three years ago. Bates, her supervisor, is responsible for reviewing Anderb's portfolio account transactions and her required monthly reports of personal stock transactions. Anderb has been using Jonelli, a broker, almost exclusively for portfolio account brokerage transactions. For securities in which Jonelli's firm makes a market, Jonelli has been giving Anderb lower prices for personal purchases and higher prices for personal sales than Jonelli gives Anderb's portfolio accounts and other investors. Anderb has been filing monthly reports with Bates only in those months in which she has no personal transactions, which is about every fourth month. Which of the following apply (applies)?

I. Anderb violated the Code and Standards in that she failed to disclose to her employer her personal transactions.
II. Anderb violated the Code and Standards by breaching her fiduciary duty to her clients.
III. Bates violated the Code and Standards by failing to enforce reasonable procedures for supervising and monitoring Anderb in her trading for her own account.
A. I and II only
B. II and III only
C. I, II, and III

User Contributed Comments 9

User Comment
Lamkerst None of the persons mentioned in the question are members or candidates. In this case, only local legislation would apply. Actual exam questions are precise about the coverage, placing CFA after names.

If my grandma advises her fellow neighbor to buy a stock A because she had a dream that it would grow, she doesn't violate Standards because she is neither candidate nor a member.
marcus Well, these persons work for investment management companies and I think we should safely assume the standards apply to all of them in a CFA exam.
hayoub78 In the exam should consider the people who works in investment as CFA members/candidates unless it is mentioned that they are not
rhardin Even if you are not a CFA charterholder, you can still violate the Code and Standards. You just don't recieve any repurcusions or get your charter revoked (because you never had one to begin with!) But you can still violate them.
ybavly WAIT A SECOND, I thought that it is only recommended to disclose all personal transactions.
siggarusfigs But there was no information on whether the broker provided the best price available for anderb's clients... If so, then she wouldn't have been violating duty to clients?
Shaan23 Yeah I did another question and it stated you dont have to disclose personal transactions to your employer.

I chose II and III. Why do we have to disclose here?
Shaan23 Regarding the last comment. I think you dont have to disclose personal transactions if there is no conflict between anybody --- here one exists so needs to be disclosed.
Dilaraj Shaan23, it says in the vignete "required monthly report of personal transactions"
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