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NEW QUESTION: 1
For the past 15 years, Susan Luna, CFA, Kyle Lawson, CFA, and Matt Miller. CFA, have worked together as equity analysts and then equity portfolio managers in the investment management division (BIMCO) of the Broadway Life Insurance Company. For the past five years, the three associates have worked together managing the BIMCO Aggressive Growth Fund (BAGF). During their management tenure the BAGF had excellent performance and was well recognized in the financial press.
Just over one year ago, Broadway Life was acquired by a larger company, Gobble Insurance, and as part of the consolidation process BIMCO was closed. The closure allowed Luna, Lawson and Miller to start their own investment management firm, Trio Investment Management LLC (TIM). TIM focuses on the small capitalization growth equities area. This is the same investment focus as the BAGF, but TIM will have individually managed accounts. Several cases have arisen calling for interpretation as to consistency with CFA Institute Standards of Professional Conduct.
Case 1
TIM markets its investment management services by contracting with small, local bank trust departments.
One of the newest bank trust clients for TIM is Shadow Mountain Bank and Trust. Judy Sampson, CFA, the trust officer for Shadow Mountain, has scheduled a meeting with a potential client. When Lawson arrives for the client meeting, he finds that all of the TIM marketing material, including biographies of TIM portfolio managers, has been relabeled by Sampson as the Shadow Mountain Wealth Management Team.
Sampson has also added the performance of BAGF into the current TIM Equity Composite Index portfolio and relabeled the resultant combined graph, the Shadow Mountain Equity Composite Index. Sampson states that making such changes would probably please clients and improve the chances of acquiring additional trust management accounts for Shadow Mountain and TIM. Lawson goes along and makes the presentation to the potential client using the Shadow Mountain marketing material and the relabeled BAGF/TIM equity performance record.
Case 2
Susan Luna of TIM is meeting with Sol Wurtzel, an institutional salesman for Turn Byer, a large national brokerage firm. Luna complains that TIM*s technology costs are too high, especially their outside software services costs. TIM currently subscribes to two investment-related software services. The first software vendor is StockCal Software Services (StockCal), which provides valuation and stock charting capabilities TIM uses in their equity research and selection process. The other vendor is Add-Invest Software (Add- Invest), a software program providing account management and performance evaluation reporting which TIM uses in developing monthly reports for all clients. In response to Luna, Wurtzel suggests that Turn Byer has an excellent soft dollar trading desk and would be willing to offer to cover TIM's StockCal and Add-Invest expenses through soft dollar commissions. Luna then reviews TIM's projected commission dollars for the year and decides there are more than enough soft dollars to pay the StockCal, AGF and Add-Invest Software bills combined. Luna believes she can be assured of excellent trade execution from Turn Byer and improved profitability for TIM because of the increased use of soft dollars. Luna then directs that the StockCal and Add-Invest software services be paid for with soft dollar or client brokerage dollars.
Case 3
Sol Wurtzel, the equity salesman for Turn Byer, has referred several clients to TIM over the past year. In fact, Wurtzel referrals currently account for almost 20% of the assets managed by TIM. The principals of TIM decide to reward Wurtzel, either by doubling the commissions paid on trades executed through Turn Byer on Wurtzel's referral accounts, or by paying Wurtzel a cash referral fee for each additional TIM account opened by a Wurtzel referral. The principals agree that any cash referral fee would need to be disclosed to clients in advance.
Case 4
Luna notes that her clients have become increasingly aware of the directed client brokerage / soft dollar commissions issue. At a recent meeting with one of her large pension clients. Service Workers Union Local #1418, the subject of directed commissions came up. Upon learning of the commission dollars available to their account, the Union trustees directed Luna to use their client brokerage of approximately
$25,000 to donate to a think lank called the Hoover Study Center of Unions at Samford University. Service Workers trustees believed the Hoover study will increase the public awareness of the benefits unions offer to their members and increase union membership. Luna concurs with the trustee's judgment on increasing union enrollment as a great goal, and follows the client's instructions and makes the $25,000 contribution to the Hoover Study Center. Another client, Rosa Lutz, has asked Luna to credit the soft dollar client brokerage proceeds from her personal retirement accounts to Roswell Academy, to update their computer lab. Luna agrees that a new computer lab for Roswell Academy is greatly needed and she allocates
510,000 of Lutz's commission dollars to Roswell Academy.
Sampson's use of the relabeled BAGF investment performance record is in violation of CFA Institute Standards:
A. unless Sampson includes written disclosures as to the true source and nature of the performance record, and has written permission from Gobble Insurance to use the performance data.
B. only if Sampson fails to include written disclosures as to the true source and nature of the performance record.
C. only if Sampson does not have written permission from Gobble Insurance to use the performance data.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
Standards 1(C) and III(D). Including the BAGF performance is a violation of Standatd 1(C) - Professionalism - Misrepresentation and Standard III(D) - Duties to Clients -Performance Presentation.
When Sampson combines the BAGF performance record with the TIM Composite Equity Composite, this gives potential clients a misleading impression of TIM s long-term equity management performance. The record of BAGF belonged first to Broadway Life, and then it was purchased as an asset by Gobble when it purchased Broadway. The use of this performance data might be acceptable if full disclosure was made as to the source and nature of the data, and if Sampson had permission from Gobble. However, by re-labeling the performance as Shadow Mountain Equity, there is a clear attempt to misrepresent reality. (Study Session 1, LOS 2.a)

NEW QUESTION: 2
User should securely distribute information across your organization, the ability to ask and answer own questions, able to print reports. What are the best SAP available tools to meet the requirement?
A. Fiori Analytical applications.
B. Crystal reports.
C. Web Intelligence (WEBI reports).
D. SAP Lumira.
Answer: A,B,C

NEW QUESTION: 3
Makayla's salary has grown at a rate of 7.3% per year for the past six years. If her increases remain the same, how long will her salary take to double?
A. 13.20 years
B. 9.86 years
C. 10.42 years
D. 27.10 years
Answer: B

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