Question #59
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: 29
Status: Correct
Correct Answer: B
Question
An analyst has constructed an investment policy statement (IPS) and a portfolio for a new client, Susan Stevens. He has also provided written guidelines on the processes used to make investment management decisions. Six month later, Stevens questions the analyst about several portfolio holdings. Although the analyst cannot remember his reasoning for recommending specific securities, and cannot find supporting documents, he assures her that the recommendations were made within the limits of her IPS and the firm's stated processes for making investment management decisions. Stevens is not satisfied by this response, but leaves the portfolio unchanged. The analyst has most likely violated:
Answer Choices:
A. Standard V(
B. Standard V(
C. Record Retention
Explanation
Standard V(C) Record Retention requires analysts to develop and maintain "...records to
support their investment analysis, recommendations...with clients and prospective
clients." The analyst is unable to explain why securities were added to the portfolio; this is
a violation of Standard V(C).
(Module 42.8, LOS 42: V(C))