強(qiáng)化練習(xí)：Study Session1：Code of Ethics and Standards of Professional Conduct-R2：Guidance for Standard I-VII
Prudent Investment Associates (PIA) is a small-cap equity investment management company that uses fundamental equity analysis in its investment decision-making process. All portfolio managers at PIA manage both discretionary and non-discretionary accounts. Kevin Danko, CFA, is PIA5s owner and chief investment officer and supervises May Chau, a recently hired portfolio manager. PIA has adopted the CFA Institute Code of Ethics and Standards of Professional Conduct.
Chau is enrolled to sit for the Level III CFA examination. In its marketing brochure, PIA states: 66May Chau is a Level III candidate in the CFA Program.55 A colleague tells Chau this presentation may be incorrect according to the CFA Institute Code and Standards and suggests the following change: “May Chau has passed Level II of the CFA examination.”
PIA has established a relationship with Fair Trading Incorporated (FTI), a regional investment bank and broker/dealer. FTI provides clients with access to research and analysts5 recommendations via a user-registered website. This access is available on the condition that clients not forward any of the research and recommendations to any other parties. In exchange for this access and after concluding that FTI provides best execution, Danko directs to FTI most of his trade orders.
FTI also provides to a select group of brokerage clients, including PIA, information regarding several of its investment banking customers. This information includes the customers5 own earnings projections. FTI instructs this select group of brokerage clients not to disseminate these earnings projections to the public until released by the investment banking customers.
On a regular basis, Danko reviews the list of''strong buys" on FTFs website to see if there have been any new "buy" recommendations. Danko quickly places orders for discretionary client accounts to purchase shares of any company for which the investment recommendation has been changed to a "'strong buy". He takes this action so discretionary account clients do not miss any price appreciation. After each purchase, he instructs Chau to perform the appropriate fundamental analysis on these companies within five business days so the research file is adequately documented.
From time to time, PIA receives initial public offering (IPO) allocations from FTL Danko allocates these IPOs to those discretionary accounts that normally participate in IPOs. If the IPO is oversubscribed, he excludes his wife5s discretionary non-fee-paying account so that he is not accused of bias when allocating the oversubscribed IPOs.
During a recent presentation, Danko and Chau are asked what procedures PIA uses to ensure employees do not benefit from information prior to executing trades in client accounts. Danko responds that PIA has the following Trading Procedures:
Procedure 1：Investment personnel are not permitted to trade securities for five business days prior to trades executed in discretionary client accounts.
Procedure 2 ：Each quarter a randomly selected group of investment personnel must provide duplicate trade confirmations to the PIA compliance officer.
Procedure 3 ：Investment personnel must receive prior approval for personal trades only for those trades greater than $5,000.