Ch7 Ethical Practices

Question 1

Prospectus delivery
Trade confirmation delivery

Answer 1

Both due no later than settlement

But administrator may require prospectus be delivered prior to the sale

Question 2

No commission
No sales load
No sales charge

Requirements?

Answer 2

No front end load

No CDSE (back load)

Rule 12b-1 fee or service fee total no more than 0.25% of avg net fund assets per year

Question 3

Who can share in profits or losses in a customer’s account?

What is required?

Answer 3

Agent only (no BD, IA, IAR)

Need written authorization of BOTH client and BD employing the agent

Question 4

When can commission be split?

Answer 4

Only if the other party is registered agent for Same BD or common control

Don’t need to disclose to client (unless it increases tsxn cost to client)

Question 5

UPIA uniform prudent investor act

Answer 5

Governs trusts & trustees

Trustee cannot delegate the responsibility to follow terms of the trust

Steps:
Analyze current position
Design optimal portfolio structure
Formalize investment strategy
Implement investment policy
Monitor & supervise