Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CAIA Level One Reversed > 1. Professional Standards & Ethics > Flashcards

1. Professional Standards & Ethics Flashcards

1
Q

Standards of Professional Conduct

A 
I. Professionalism
II. Integrity of Capital Markets
III. Duties to Clients
IV. Duties to Employers
V. Investment Analysis, Recommendations, Actions
VI. Conflicts of Interest
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

I. Professionalism

A

A. Knowledge of the Law
B. Independence and Objectivity
C. Misrepresentation
D. Misconduct

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

II. Integrity of Capital Markets

A

A. Material Nonpublic Information

B. Market Manipulation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

III. Duties to Clients

A 
A. Loyalty, Prudence, and Care
B. Fair Dealing
C. Suitability
D. Performance Presentation
E. Preservation of Confidentiality
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

IV. Duties to Employers

A

A. Loyalty
B. Additional Compensation Arrangements
C. Responsibilities of Supervisors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

V. Investment Analysis, Recommendations, Actions

A

A. Diligence and Reasonable Basis
B. Communication with Clients and Prospective Clients
C. Record Retention

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

VI. Conflicts of Interest

A

A. Disclosure of Conflicts
B. Priority of Transactions
C. Referral Fees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

I(A) Knowledge of the Law: Guidance

A
  • Always adhere to most strict set of rules
  • Disassociate or separate one’s self from illegal or unethical behavior
  • Inaction and continued association construed as knowing participant
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

I(A) Knowledge of the Law: Rec for Compliance

A

Member:
- have procedure to keep up with changes
- compliance reviewed ongoing basis
- maintain current reference materials
- seek legal or compliance when in doubt
- document & disassociate when in doubt
Firm:
- develop & adopt code of ethics
- make available materials on regulations& law
- establish written procedures for reporting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

I(B) Independence & Objectivity_Guidance

A
  • analysts should use variety of source
  • buy side may try to pressure sell side analysts
  • fund managers don’t accept gifts that effect you
  • credit rating make sure plan prevent influence
  • issuer paid research, ideally flat fee not tied result
  • travel: best practice, pay for self
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

I(B) Independence & Objectivity_ Rec for Compliance

A
  • create a restricted list
  • restrict special cost arrangement
  • limit gifts, tokens only, clear value limits
  • restrict equity IPO and private placement
  • require pre-approval for IPO
  • formal written procedures, that are reviewed
  • appoint compliance officer, and have clear procedures for reporting violations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

I(C) Misrepresentation_Guidance

A
  • do not make any misrepresentations or give false impressions in oral or electronic communications
  • do not plagiarize, i.e. do not use someone else’s work without giving them credit
  • do not knowingly omit information

**models developed by others are the firm are the firms property and can be used without attribution. However, a report written by one analyst may not be released under another name.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

I(C) Misrepresentation_ Rec for Compliance

A
  • firms should provide employees with list of services and firms qualifications
  • maintain records of materials used to generate reports to avoid plagiarism
  • members should encourage firms to have procedure for verifying marketing claims of third parties
  • ** Information from recognized financial and statistical reporting services need not be cited
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

I(D) Misconduct_ Guidance

A
  • CFA institute discourages unethical behavior in all aspects of life
  • Do you abuse Professional Conduct Program to settle personal, political, or other disputes that are not related to professional ethics
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

I(D) Misconduct_ Rec for Compliance

A
  • firms should develop code of ethics
  • check references for potential employees
  • give employees list of potential violations and sanctions
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

II(A) Material Nonpublic Information_ Guidance

A
  • information is material if its disclosure would impact price of security
  • nonpublic when not make available to the market
  • prohibition to acting extends to all products
17
Q

II(A) Material Nonpublic Information_ Rec for Compliance

A
  • use firewalls within firms
  • substantial control on interdepartmental communications
  • review employee trades
  • monitor or restrict prop trading when in possession of material nonpublic information
18
Q

Mosaic Theory

A

There is no violation when an analyst reaches an investment conclusion through analysis of public information together with items of nonmaterial, nonpublic information.
***key_nonmaterial

19
Q

II(B) Market Manipulation_ Guidance

A
  • Applies to transactions that deceive the market by distorting the price-setting mechanisms of financial instruments or by securing a controlling position in order to manipulate the price or related derivative and/or the asset itself.
  • Spreading false rumors also prohibited
20
Q

III(A) Loyalty, Prudence and Care_ Guidance

A
  • client interests always come first
  • act as another in your place would
  • manage pool of assets according to governing documents
  • make investment decisions in the context of the total portfolio
  • vote proxies informed, not necessary to vote all
  • soft dollars or commissions must be used to benefit client
  • client may be investment community instead of specific entity or person
21
Q

III(A) Loyalty, Prudence and Care_ Rec for Compliance

A
  • at least quarterly submit to clients itemized statements

- firms should have clear policies and procedures

22
Q

III(B) Fair Dealing_Guidance

A
  • do not discriminate against any clients when disseminating recommendations or taking investment action
  • different service levels are ok, but can’t disadvantage any clients
  • disclose and differentiate different levels, and make available to anyone willing to pay
23
Q

III(B) Fair Dealing_ Rec for Compliance

A

sdgsdg

CAIA Level One Reversed (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions