Is Uga in violation of the CFA Institute Standards concerning Preservation of Client Confidentiality? A. No. B.Yes; by revealing her client’s intentions. C.Yes; by offering to arrange a meeting with her client. Correct Answer: B Reference: CFA Level 1, Volume 1, Study Session 1, Reading 3, LOS b Walsh is in violation of the standard concerning preservation of client confidentiality regardless of the fact that she has not revealed the identity of the client or the amount of funds set aside for donation. The standard concerning client confidentiality requires members and candidates to keep information communicated by clients confidential. Information concerning the client’s intentions is considered confidential information which the member or candidate has obtained as a result of his or her abilities to manage the client’s business.
CFA Level I Mock Exam 2 – Solutions (AM)FinQuiz.com © 2017 - All rights reserved.1111. Anne Miguel is AM Associates’ equity fund manager, a European portfolio management firm. She manages the accounts of 25 high net worth clients with significant allocations to Latin American and domestic equities. This year several of her clients have requested for an allocation to North American equities. Lacking expertise in the requested securities, she contacts her friend Dan Harrison, a leading North American equity specialist and delegates the responsibility of managing the new securities to Harrison. In a recent report on client account performance, Miguel solely discloses the overall portfolio performance providing a breakdown of all constituent security returns. Miguel is most likely in violation of the CFA Institute Standards of Professional Conduct concerning: A.Fair Dealing B.Conflicts of interest C.Diligence and reasonable basis Correct Answer: B Reference: CFA Level 1, Volume 1, Study Session 1, Reading 3, LOS b By failing to disclose her personal relationship with Harrison, Miguel is in violation of the standard concerning conflicts of interest. Disclosure of the conflict will allow the firm and clients to judge whether the relationship may have influenced her decision to delegate the responsibility of managing North American equities to Harrison. The standard concerning fair dealing requires members and candidates to deal fairly with all clients when making investment recommendations or taking investment actions. There is no evidence of client accounts being dealt with unfairly. The standard concerning diligence and reasonable basis has not been violated as the accounts have been transferred to a renowned expert in the region.
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- Fall '15
- Financial services, CFA Level, Chartered Financial Analyst