Regulation and Ethical Responsibilities Flashcards
7 cards from real IFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulation and Ethical Responsibilities flashcards as text
Which of the following is an example of a registrant fulfilling their 'fair dealing' obligation to clients?
Answer: Providing complete and accurate information so clients can make informed decisions
Fair dealing requires registrants to deal honestly, fairly, and in good faith, which includes ensuring clients receive complete and accurate information.
In Quebec, the equivalent self-regulatory organization to the MFDA for mutual fund dealers is:
Answer: CSF
The Chambre de la sécurité financière (CSF) regulates mutual fund representatives in Quebec, while the Autorité des marchés financiers (AMF) is the provincial securities regulator.
A registrant suspects a client is attempting to launder money through a series of small deposits. Under FINTRAC rules, the registrant must:
Answer: File a Suspicious Transaction Report regardless of the amount involved
Suspicious Transaction Reports must be filed with FINTRAC whenever there are reasonable grounds to suspect a transaction is related to money laundering or terrorist financing, regardless of the amount.
The concept of 'best execution' in the context of mutual fund trading means:
Answer: Executing client orders at the most advantageous terms reasonably available
Best execution requires firms to take reasonable steps to achieve the most advantageous outcome for clients, considering price, speed, likelihood of execution, and other relevant factors.
A mutual fund representative who recommends a fund primarily because it pays a higher trailer fee than a comparable fund is:
Answer: Potentially violating their conflict of interest and suitability obligations
Recommending a fund based on its trailer fee rather than client suitability is a conflict of interest that violates regulatory obligations to act in the client's best interest.
Under NI 81-102, how frequently must a money market fund's NAV be calculated?
Answer: Daily
NI 81-102 requires that mutual funds, including money market funds, calculate their net asset value per unit (NAVPU) at least once every business day.
When a registrant identifies a conflict of interest that cannot be avoided or adequately managed, the appropriate action is to:
Answer: Decline to act for the client in that specific matter
If a conflict of interest cannot be properly managed or avoided, the registrant must decline to act for the client in that matter to protect the client's interests.