CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Josh Fratczak, CFA, is the chief compliance officer for Skogland Investment Limited. Fratczak institutes a new policy requiring the pro rata distribution of new security issues to all established discretionary accounts for which the new issues are appropriate. The policy also provides for the distribution of new issues to newly established discretionary accounts where appropriate after their one-month anniversary date. This policy is disclosed to all existing and potential clients. Did Fratczak violate any CFA Institute Standards of Professional Conduct?
A. Yes, because the distribution policy should treat all discretionary accounts equally.
B. Yes, because disclosure of inequitable allocation methods does not fulfill the duty for fair and equitable trade allocation procedures.
C. No
Explanation: Standard III (B) Fair Dealing requires that when making investments in new offerings, advance indications of interest should be obtained, and a method for calculating allocations provided. Additionally, disclosure of inequitable allocation methods does not relieve a member from this obligation.

User Contributed Comments 4

User Comment
Lambo83 Come on! A and B could both be the correct answer.
Lambo83 My bad. Just checked the LOS. 'Fair not 'equal' seems to be the differentiator here
fredpat01 yeah equal means exactly the same while equitable means farily.
gyee2012 This one implies close reading... it states to newly issues to newly accounts rather than to all acounts...

The fairness is lacking therefore violating III Duties to Client - Fair Dealing
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