Question #61
Reading: Reading 42.3 Standards of Professional Conduct Guidance for Standards III
PDF File: Reading 42.3 Standards of Professional Conduct Guidance for Standards III.pdf
Page: 26
Status: Correct
Correct Answer: B
Question
Rickard Advisors recently had a trading error in a customer account that was subsequently discovered by Rickard. The firm felt embarrassed by the disclosure of this error, and, in order to induce the client to continue its relationship, Rickard offers the client preferential access to a new issue that is expected to be "hot." Which Standard is violated, if any?
Answer Choices:
A. The Standard concerning Independence and Objectivity
B. The Standard concerning Fiduciary Duty
C. The Standard concerning Fair Dealing
Explanation
Rickard is in violation of the Standard concerning Fair Dealing by offering the client
preferential access to a "hot" new issue. There is no obvious violation of Fiduciary Duty,
since there is no evidence that Rickard is placing its own financial interest ahead of the
client.
(Module 42.5, LOS 42: III(B))