FIA Regulatory Compliance & Ethics 4

Question 1

Under the USA PATRIOT Act, financial institutions must implement a Customer Identification Program (CIP) to verify the identity of customers when:

Accepted Answer

Opening a new account for an individual or entity

Answer

A customer requests a wire transfer exceeding $3,000

Answer

A customer's account shows unusual transaction patterns

Answer

Renewing an existing account relationship annually

Question 2

The Employee Retirement Income Security Act (ERISA) imposes which of the following duties on plan fiduciaries?

Accepted Answer

Acting solely in the interest of plan participants and beneficiaries

Answer

Maximizing short-term investment returns regardless of risk

Answer

Following employer directives on investment selection without independent review

Answer

Maintaining 100% of assets in US government securities

Question 3

A financial information professional who discovers an error in a previously distributed research report is ethically obligated to:

Accepted Answer

Promptly issue a correction to all recipients of the original report

Answer

Correct the error only if it affects the report's final recommendation

Answer

Delete all digital copies of the erroneous report from firm systems

Answer

Notify only the clients who traded based on the incorrect information

Question 4

The SEC's Market Access Rule (Rule 15c3-5) requires broker-dealers to implement risk management controls before providing customers with:

Accepted Answer

Direct market access or sponsored access to trade in securities

Answer

Access to margin accounts with leverage exceeding 2:1

Answer

Ability to trade in securities listed on foreign exchanges

Answer

Access to options trading at any level beyond covered calls

Question 5

In the context of financial services ethics, 'window dressing' refers to the practice of:

Accepted Answer

Buying high-performing securities at period-end to make a portfolio look better in reports

Answer

Enhancing the visual presentation of client account statements

Answer

Installing physical security measures at branch office windows

Answer

Updating firm disclosures to reflect recent regulatory changes

Question 6

The CFA Institute's Code of Ethics requires members to place their clients' interests:

Accepted Answer

Ahead of their own personal interests and their employer's interests

Answer

Equal to but not above the interests of their employer

Answer

Below regulatory compliance requirements but above employer directives

Answer

Subject to the profitability needs of the firm they represent

Question 7

An AML compliance officer at a broker-dealer receives a subpoena from law enforcement requesting customer account records. The correct first step is to:

Accepted Answer

Contact legal counsel and follow firm procedures before producing any records

Answer

Immediately produce all requested records without notifying senior management

Answer

Notify the customer whose records are being sought as required by law

Answer

Destroy any records that might implicate the firm in the investigation

FIA Regulatory Compliance & Ethics 4

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