Lecture #3 Flashcards
What is teh Ontario Securities Commission (OSC) Whistle Blower Program?
- OSC Whistleblower Program: Offers rewards up to $5 million for valuable tips.
- Eligibility: Tips must be original, high-quality information about misconduct.
- Reward Range: Whistleblowers receive 5% to 15% of the penalties collected.
- Minimum Payout Threshold: The case must result in at least $1 million in fines or voluntary payments.
- Goal: Encourage reporting of financial misconduct and enhance enforcement actions.
What are the top three steps to present an ethical case?
- Idnetify the problem
- Clearly state the ethics of the situation
- State who gets hurt
Federal regulation governing securities and exchanges is carried through a series of federal laws:
what do they specifically deal with?
- PIPEDA ACT
- Criminal code
- Canadian Business Act
- Terrorist Financing Act
- Income Tax Act, Competition Act and Investment Canada Act
- PIPEDA ACT (Privacy)
- Criminal code (insider trading)
- Canadian Business Act (shareholders rights)
- Terrorist Financing Act (money laundering)
- Income Tax Act, Competition Act and Investment Canada Act (all deal with Mergers & Aquitision’s)
what does the Office of Superintendent of Financial Institutions (OSFI) do?
Office of Superintendent of Financial Institutions (OSFI)regulates all federally chartered institutions and federally administered Pension Plans.
Self-Regulating Bodies: what is the IIROC and the MFDA, and what do they create?
IIROC Investment Industry Regulatory Organization of Canada: is a national (federal) self regulatory body that overseas all investment dealers and traders
MFDA Mutual Fund Dealers Association: is a national self regulating body for the distribution of funds
IIROC and MFDA have recently merged into one new SRO called Canadian Investment Regulatory Organization (CIRO)
what is the 1st Standard (A) Knowledge of the Law ?
Standard 1:Professionalism (A) Knowledge of the Law
- It is your responsibility to:
- Know the laws and regulations that govern your profession
- Stay informed and up to date
- Review company procedure, know who the compliance officer is.
- Disassociate yourself from illegal or unethical behaviour
- Report to or discuss with manager or to compliance officer any activity to stop the unethical or illegal behaviour
- Maintain a written record
Define “Insider”
A person who owns or controls more than 10% of a company’s shares or voting rights.
- This means they have a significant influence over company decisions.
- a person who engages in or proposes to engage in any business or professional activity with or on behalf of the corporation
^^^^
Insider: a person who receives material confidential information from a person described above
What is the 1st Standard (B) Independence and Objectivity?
**Standard 1:Professionalism (B) Independence and Objectivity:
They must stay unbiased (objectivity) and not accept gifts or favors that could affect their judgment (independence).
What Standard (A, B, or C) does this violate? Dillon, an analyst in the corporate finance department of an investment services firm, is making a presentation to a potential new business client that includes the promise that her firm will provide full research coverage of the
potential client.
Comment: Dillon may agree to provide research coverage, but she must not commit her firm’s research department to providing a favorable
recommendation. The firm’s recommendation (favorable, neutral, or unfavorable) must be based on an independent and objective investigation and analysis of the company and its securities.
Therefore B
What is Standard 1 (C) Misrepresentation?
They must never lie or mislead others about investments or their professional work.
Misrepresentation includes:
- bending or tiwsting facts to suite your purpose
- plagiarism
what is the Know Your Product – MR-0048
Know Your Client requirements - fundamental to meeting basic suitability obligations
Be ready to say “ I don’t know . I will find the correct answer and get back to you “
define leverage and what are the risks of it?
Leverage: involves borrowing money to increase the size of a client’s investment portfolio.
* Risks:
- Increases both potential returns and risks.
- If an investment performs poorly, the borrowed funds must still be repaid with interest, resulting in losses.
- Ethical concerns arise when managers use leverage without client knowledge or for excessive risk-taking, putting the client’s interests behind their own.
- Example shows a loss of $50,000 for the client while the manager still earns a reduced fee.
