Chapter 1: Standards of Conduct and Ethics Flashcards
Define Duty of Care
The Duty a Registered Representative has to a client to ensure that everything ‘reasonably practicable’ is done to protect the client’s assets. This involves devoting the necessary time and attention to be able to make informed decisions
Define Ethics
Defined as a set of values, or morals that guide individual behaviour
Define Fiduciary Duty
A legal term that describes a high degree of duty of care. Criteria that may be used to determine whether a fiduciary duty is present in a Registered Representative Client relationship includes a high degree of reliance by the client on the Registered Representative’s advice and the vulnerability of the client. In Quebec this concept is referred to as a “Contract Mandate”
Investment Industry Regulatory Organization of Canada
The national Self-Regulatory Organization overseeing all dealer members and trading activity on equity and debt marketplaces in Canada. IIROC is responsible for enforcing the rules and regulations regarding sales, business and financial practices and trading activities of individuals and dealer members under IIROC’s jurisdiction. It also develops recommendation to amend existing rules, establishing new rules and interprets existing rules.
What is the Know Your Client Rule?
The cardinal rule in making investment recommendations. All relevant information about every client and every order must be known to ensure that all recommendations made by an IA to clients are suitable.
What is the Know your Product rule?
A companion obligation of Know your Client. Before recommending an investment product to a client you must understand how a product is constructed and how it is likely to perform.
Registered Representative
Individuals licensed to provide investment advice. Often referred to as Investment Advisors.
What is Suitability
A Registered Representatives major concern in making investment recommendations. All information about a client and a security must be analyzed to determine if an investment is suitable for the client in accounts where suitability exemption does not apply.
