Ethical Considerations in Stock Trading
72 Questions
1 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the potential risk of Jacobson not advising his branch manager of the transactions?

  • Preventing effective supervision of client accounts (correct)
  • Exposing Toyco Inc. to potential losses
  • Avoiding any liability for the firm
  • Exposing the clients to unknown risks

    • Why might the clients view Jacobson as a representative of the firm in facilitating the investment?

  • Because Jacobson did not advise his branch manager of the transactions
  • Because Jacobson obtained cheques from the clients
  • Because Jacobson mentioned this investment to other clients
  • Because Jacobson delivered share certificates registered in the clients’ names (correct)

    • What is the term used to describe dealings in securities outside of the normal business of the firm?

  • Supervisory negligence
  • Unknown risks exposure
  • Selling away or outside deals (correct)
  • Private arrangement

    • Why might firms be exposed to liability for the actions of their employees in effecting such trades?

    <p>Because it's done without the knowledge of the firm</p> Signup and view all the answers

    Why does van Nostrand spend at least one quarter of her time trading for her own account?

    <p>To increase her potential profit and take advantage of stock bargains.</p> Signup and view all the answers

    What is the primary concern regarding van Nostrand's actions?

    <p>She is neglecting or compromising the level of service expected by her clients.</p> Signup and view all the answers

    Why should registrants avoid excessive risk when trading for personal accounts?

    <p>To ensure that clients' accounts are not neglected or compromised.</p> Signup and view all the answers

    What was the outcome of Walter Garcia's participation in the political organization's protest?

    <p>His occupation and firm were identified on the TV news.</p> Signup and view all the answers

    What action did Oliveira take after learning that the stock opened at $29.75?

    <p>She quickly sold short 1,000 shares in her own account.</p> Signup and view all the answers

    What did the director of the pension fund instruct Oliveira to do after she reported the stock opening below $30?

    <p>To sell the entire position</p> Signup and view all the answers

    How did Oliveira violate her regulatory responsibility to the client?

    <p>By trading on material, non-public information</p> Signup and view all the answers

    What unethical practice is Oliveira accused of?

    <p>Frontrunning</p> Signup and view all the answers

    What is the purpose of Policy 9A?

    <p>To regulate full service dealers' acceptance of non-recommended trades without a suitability obligation</p> Signup and view all the answers

    What is the requirement for members operating under a CSA exemption?

    <p>Obtain Policy 9A exemptions from suitability within a year of the implementation of the IDA rule</p> Signup and view all the answers

    What distinguishes the accounts affected through Policy 9A from those used by any full service branch?

    <p>They clearly label the accounts as 'order execution only' accounts or some variant thereof</p> Signup and view all the answers

    What is the purpose of Policy 9B?

    <p>To allow full service dealers to execute client orders without incurring a suitability obligation</p> Signup and view all the answers

    What personal financial dealings should registrants avoid with clients?

    <p>Sharing a financial interest in an account with a client</p> Signup and view all the answers

    Why should personal trading activity be kept to reasonable levels?

    <p>To ensure enough time to service clients properly</p> Signup and view all the answers

    How should registrants conduct any personal financial or business dealings with clients?

    <p>In such a way as to avoid any real or apparent conflict of interest and be disclosed to the firm</p> Signup and view all the answers

    What is the expectation for other publicly visible activities in which registrants participate?

    <p>They should be conducted moderately and responsibly</p> Signup and view all the answers

    What is required for a dealer to obtain relief under Policy 9B?

    <p>Establishing record keeping and supervisory systems, and ensuring all trades are marked as recommended</p> Signup and view all the answers

    What is the outcome when disputes between dealers and clients are resolved through civil litigation?

    <p>Courts will generally hold that the IA owes a fiduciary duty to the client if investment advice and recommendations are provided to the client</p> Signup and view all the answers

    What is required to avoid potential liability for potentially unsuitable purchases and sales of securities?

    <p>Providing sound advice and making recommendations based on the financial and personal status of the client</p> Signup and view all the answers

    What duty does an Investment Advisor (IA) owe to the client in providing investment advice?

    <p>A fiduciary duty if investment advice and recommendations are provided to the client and the client relies on such advice</p> Signup and view all the answers

    What can the Administrators do if they find that the provisions of their respective Acts have been violated?

    <p>Recommend laying a charge against the offending party</p> Signup and view all the answers

    What is the maximum penalty for offences under the Ontario Securities Act after the passing of Bill 198?

    <p>$5,000,000 fine and imprisonment for five years less a day</p> Signup and view all the answers

    What power does Bill 198 give to the OSC regarding noncompliance with Ontario securities law?

    <p>Order the disgorgement of monies obtained as a result of noncompliance</p> Signup and view all the answers

    What do the amendments prohibit in relation to securities law noncompliance?

    <p>Engaging in acts that perpetrate a fraud</p> Signup and view all the answers

    What power did the Manitoba Securities Commission gain from the 2003 amendments?

    <p>The power to order repayment when investors lose money due to improper conduct</p> Signup and view all the answers

    What penalties can a commission panel order following a hearing on improper or illegal conduct?

    <p>Reprimands, fines, suspensions, or cancellation of registration</p> Signup and view all the answers

    What new feature did the British Columbia Securities Commission provide on its website in the first quarter of 2003?

    <p>Information about individuals who have faced disciplinary action since 1987</p> Signup and view all the answers

    What is the general prohibition in the amendments regarding statements that significantly affect the market price of a security?

    <p>Making misleading or untrue statements</p> Signup and view all the answers

    Why should registrants avoid personal financial dealings with clients?

    <p>To prevent conflicts of interest and maintain professionalism.</p> Signup and view all the answers

    What is the primary concern regarding personal trading activity for registrants?

    <p>Losing personal funds and lacking time for client servicing.</p> Signup and view all the answers

    What is the expectation for other publicly visible activities in which registrants participate?

    <p>They should be conducted responsibly and moderately to avoid negative public image.</p> Signup and view all the answers

    What unethical practice should registrants avoid when dealing with clients?

    <p>Sharing a financial interest in an account with a client without disclosure.</p> Signup and view all the answers

    What should registrants prioritize in all business dealings?

    <p>The interests of the client</p> Signup and view all the answers

    How should registrants handle client assets?

    <p>Use them only for the client’s purposes</p> Signup and view all the answers

    What must registrants ensure when relaying information about a client’s existing portfolio?

    <p>Take reasonable steps to ensure the information is complete and accurate</p> Signup and view all the answers

    What must registrants disclose to ensure fair, objective dealings with clients?

    <p>Potential conflicts of interest</p> Signup and view all the answers

    What is the cardinal rule in making investment recommendations?

    <p>Know Your Client</p> Signup and view all the answers

    What is the primary aim of the Code of Ethics and Standards of Conduct for registrants?

    <p>To prioritize the interests of the investing public</p> Signup and view all the answers

    What may lead to registrants having a fiduciary duty to their clients?

    <p>Reliance of the client on their advice</p> Signup and view all the answers

    What is the key aspect of ethical conduct for registrants?

    <p>Concern for the spirit and intent of the rules</p> Signup and view all the answers

    What should registrants prioritize in all business dealings as per the text?

    <p>Conducting in a responsible and moderate manner</p> Signup and view all the answers

    Why is it doubtful that a registrant actively trading his or her own account on a daily basis will have enough time to properly service clients?

    <p>Excessive trading losses will present a negative image to clients</p> Signup and view all the answers

    What must registrants avoid in their personal financial dealings with clients, as mentioned in the text?

    <p>Sharing a financial interest in an account with a client</p> Signup and view all the answers

    What is the expectation for other publicly visible activities in which registrants participate, according to the text?

    <p>Participating moderately and responsibly to avoid unfavourable public image</p> Signup and view all the answers

    What is the cardinal rule in making investment recommendations?

    <p>Duty of care and suitability</p> Signup and view all the answers

    What may have legal implications for the registrant and the firm?

    <p>Having a fiduciary duty to the clients</p> Signup and view all the answers

    What is the primary aim of the Code of Ethics and Standards of Conduct for registrants?

    <p>Protecting the interests of the investing public</p> Signup and view all the answers

    What does ethical conduct entail for registrants?

    <p>Concerning themselves with the spirit and intent of the rules</p> Signup and view all the answers

    What is the expectation for all trades and acts in furtherance of trades, according to the text?

    <p>They must be executed only by individuals who are registered and approved</p> Signup and view all the answers

    What is the requirement for the distribution of securities, as per the text?

    <p>Securities should be distributed only if approved for distribution by the appropriate regulatory authority</p> Signup and view all the answers

    What is the expectation for conducting client business, according to the text?

    <p>Business conduct should merit public respect and confidence</p> Signup and view all the answers

    What is the primary expectation regarding client orders, based on the text?

    <p>Client orders must be entered only at the client's direction unless the account has been properly constituted as a discretionary or managed account pursuant to the applicable regulatory requirements</p> Signup and view all the answers

    What is the term for the trading of securities through the facilities of a stock exchange after the primary distribution?

    <p>Secondary trading</p> Signup and view all the answers

    In which document is the disclosure for public offering of securities normally made?

    <p>Prospectus</p> Signup and view all the answers

    What is subject to the same disclosure requirement as a public sale when sold from a control position?

    <p>Secondary sale</p> Signup and view all the answers

    What does the Securities Act and stock exchange requirements mandate for issuers as securities move beyond the primary distribution?

    <p>Filing of information concerning material changes</p> Signup and view all the answers

    What power did the Manitoba Securities Commission gain from the 2003 amendments?

    <p>Power to order repayment when investors lose money due to improper conduct</p> Signup and view all the answers

    What penalties can a commission panel order following a hearing on improper or illegal conduct?

    <p>Compensation for financial loss and reprimands</p> Signup and view all the answers

    What is the general prohibition in the amendments regarding statements that significantly affect the market price of a security?

    <p>Prohibition on making statements that are knowingly false or misleading</p> Signup and view all the answers

    What new feature did the British Columbia Securities Commission provide on its website in the first quarter of 2003?

    <p>A feature to provide information about individuals who faced disciplinary action</p> Signup and view all the answers

    What did the Recognizing Regulators approve amendments to the Universal Market Integrity Rules to specifically provide?

    <p>Prohibition of Regulated Persons from impeding or obstructing a Market Regulator in an investigation</p> Signup and view all the answers

    What type of activities are ATSs restricted from engaging in, as stated in the text?

    <p>Offering listing services to issuers</p> Signup and view all the answers

    What additional role may Regulation Services Providers (RS) fulfill, according to the text?

    <p>Regulating Alternative Trading Systems (ATSs)</p> Signup and view all the answers

    What is the primary purpose of the amendments to the Universal Market Integrity Rules (UMIR) as mentioned in the text?

    <p>To enhance the investigative and regulatory powers of Market Regulators</p> Signup and view all the answers

    What is the primary aim of money laundering?

    <p>To control funds without raising suspicion</p> Signup and view all the answers

    According to the International Monetary Fund (IMF), what is the estimated range of money laundering as a percentage of the world’s GDP?

    <p>2-5%</p> Signup and view all the answers

    What is the role of securities dealers in curbing criminal and terrorist activities?

    <p>To limit access to funds generated from criminal activities</p> Signup and view all the answers

    What is the estimated lower figure for the aggregate size of money laundering in terms of the world’s GDP, based on 2002 statistics?

    <p>$980 billion</p> Signup and view all the answers

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser