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John Green, CFA, is a sell-side technology analyst at Federal Securities, a large global investment banking and advisory firm. In many of his recent conversations with executives at the firms he researches, Green has heard disturbing news. Most of these firms are lowering sales estimates for the coming year. However, the stock prices have been stable despite management's widely disseminated sales warnings. Green is preparing his quarterly industry analysis and decides to seek further input. He calls Alan Volk, CFA, a close friend who runs the Initial Public Offering section of the investment banking department of Federal Securities.
Volk tells Green he has seen no slowing of demand for technology IPOs. "We've got three new issues due out next week, and two of them are well oversubscribed." Green knows that Volk's department handled over 200 IPOs last year, so he is confident that Volk's opinion is reliable. Green prepares his industry report, which is favorable. Among other conclusions, the report states that "the future is still bright, based on the fact that 67% of technology IPOs are oversubscribed." Privately, Green recommends to Federal portfolio managers that they begin selling all existing technology issues, which have "stagnated," and buy the IPOs in their place.
After carefully evaluating Federal's largest institutional client's portfolio, Green contacts the client and recommends selling all of his existing technology stocks and buying two of the upcoming IPOs, similar to the recommendation given to Federal's portfolio managers. Green's research has allowed him to conclude that only these two IPOs would be appropriate for this particular client's portfolio. Investing in these IPOs and selling the current technology holdings would, according to Green, "double the returns that your portfolio experienced last year." Federal Securities has recently hired Dirks Bentley, a CFA candidate who has passed Level 2 and is currently preparing to take the Level 3 CFA® exam, to reorganize Federal's compliance department.
Bentley tells Green that he may be subject to CFA Institute sanctions due to inappropriate contact between analysts and investment bankers within Federal Securities. Bentley has recommended that Green implement a firewall to rectify the situation and has outlined the key characteristics for such a system.
Bentley's suggestions are as follows:
1. Any communication between the departments of Federal Securities must be channeled through the compliance department for review and eventual delivery. The firm must create and maintain watch, restricted, and rumor lists to be used in the review of employee trading.
2. All beneficial ownership, whether direct or indirect, of recommended securities must be disclosed in writing.
3. The firm must increase the level of review or restriction of proprietary trading activities during periods in which the firm has knowledge of information that is both material and nonpublic.
Bentley has identified two of Green's analysts, neither of whom have non-compete contracts, who are preparing to leave Federal Securities and go into competition. The first employee, James Ybarra, CFA, has agreed to take a position with one of Federal's direct competitors. Ybarra has contacted existing Federal clients using a client list he created with public records. None of the contacted clients have agreed to move their accounts as Ybarra has requested. The second employee, Martha Cliff, CFA, has registered the name Cliff Investment Consulting (CIC), which she plans to use for her independent consulting business.
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Bentley is contemplating his response to Green.
Which of BentJey's recommendations regarding the key characteristics of a firewall are inconsistent with those recommended by CFA Institute Standards of Professional Conduct?
A. Characteristic 3.
B. Characteristic 2.
C. Characteristic 1.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
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(Study Session 1, LOS 2.a)
NEW QUESTION: 2
An inborn error of metabolism that causes premature destruction of RBC:
A. Celiac Disease
B. G6PD
C. Phenylketonuria
D. Hemocystinuria
Answer: B
Explanation:
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NEW QUESTION: 3
The SSL VPN implementation on a Cisco ASA adaptive security appliance supports which three of these features?
(Choose three)
A. establishing a Winsock 2 connection between the client and the server through smart tunnels
B. establishing a Winsock 2 connection between the client and the server through port forwarding
C. sending TCP-only traffic through a smart tunnel
D. sending TCP and UDP traffic through port forwarding
E. sending TCP-only traffic through port forwarding
F. sending TCP and UDP traffic through a smart tunnel
Answer: A,C,E
Explanation:
http://www.cisco.com/c/dam/en/us/solutions/collateral/enterprise/design-zone-security/tunnel.pdf
NEW QUESTION: 4
You manage an Office 365 tenant that uses an Enterprise E1 subscription.
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B. Set-MailboxJunkEmailConfiguration
C. New-RetentionPolicyTag
D. Set-HostedContentFilterPolicy
E. Set-MalwareFilterPolicy
F. Enable-JournalRule
G. Set-CsPrivacyConfiguration
H. Set-CsUser
Answer: E
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