CIFC Professional Ethics and Standards 3

Question 1

A mutual fund representative receives a gift from a client worth $500. According to CIFC ethical standards, what should the representative do?

Accepted Answer

Report it to their compliance department and follow firm policy on gifts

Answer

Gifts above nominal value must be disclosed to compliance, as they can create conflicts of interest that undermine objectivity.

Question 2

Under CIFC standards, what obligation does a registrant have when they become aware of a colleague engaging in unethical conduct?

Accepted Answer

Report the conduct through appropriate internal or regulatory channels

Answer

Professional responsibility includes reporting known unethical or illegal conduct through proper compliance or regulatory channels.

Question 3

What is 'front running' in securities markets?

Accepted Answer

Trading on personal account ahead of executing known client orders to profit

Answer

Front running is an illegal practice where a registrant trades for their own account based on advance knowledge of pending client orders.

Question 4

Which regulatory body is primarily responsible for overseeing mutual fund dealers in Canada?

Accepted Answer

Canadian Investment Regulatory Organization (CIRO)

Answer

CIRO (formerly MFDA) is the self-regulatory organization that oversees mutual fund dealers and their representatives in Canada.

Question 5

A client asks their representative to execute a transaction that the representative believes is unsuitable. After explaining the concerns, the client insists on proceeding. What is the most appropriate course of action?

Accepted Answer

Obtain the client's acknowledgment of the suitability concerns and document it, then consider firm policy

Answer

When a client insists on an unsuitable trade, the representative should document the client's acknowledgment of the risks and follow firm policy, which may permit execution with proper notation.

(CIFC) Canadian Investment Funds Course Practice Test

(CIFC) Canadian Investment Funds Course Practice Test

CIFC Professional Ethics and Standards 3