Question #28 - Reading 42.5 Standards of Professional Conduct Guidance for Standards V

Reading: Reading 42.5 Standards of Professional Conduct Guidance for Standards V

PDF File: Reading 42.5 Standards of Professional Conduct Guidance for Standards V.pdf

Page: 16

Status: Correct

Correct Answer: B

Shared Context

- Which of the following statements regarding the research report on Sunrise Technologies after the company went public is CORRECT? A) Jones has violated the misrepresentation Standard with her aggressive growth prediction for Sunrise Technologies; Karloff has violated the plagiarism Standard by disseminating information he received in confidence. B) Jones is in compliance with the objectivity Standard because she made her recommendation based facts, not conjecture; Karloff has violated the Standard regarding the use of material nonpublic information. C) Jones has violated the Standard on research reports because she failed to distinguish between fact and opinion; Karloff is in compliance with the supervisory- responsibilities Standard because he is keeping up with Jones’ actions and ensuring her report is accurate.

Question

According to CFA Institute Standards concerning fair dealing, Jones is required to do which of the following?

Answer Choices:

A. Ensure that accounts belonging to her immediate family purchase securities only after other clients have had the chance to buy

B. Disseminate new investment recommendations to all clients at the same time

C. Disclose to all clients whether different levels of service are offered

Explanation

Jones must disclose different levels of service to all clients. Jones must inform clients about new buy recommendations and advise them not to sell, but she cannot disregard the order if the client still wishes to sell. Family-owned accounts should be handled in the same way as other accounts, and cannot be made to wait until everyone else has acted. The Standard allows for the fact that it is impossible to notify everyone at the same time. (Module 42.8, LOS 42: V(A))

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