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
Under the Client Relationship Model (CRM2) requirements, dealers must provide clients with an annual report that discloses:
Answer: All charges and compensation paid by the client and portfolio performance
CRM2 requires annual reports disclosing the dollar amounts of all charges paid by the client and the performance of the client's account on a dollar-weighted basis.
A registrant's obligation to maintain client records under NI 31-103 generally requires records to be kept for a minimum of:
Answer: 7 years
NI 31-103 requires registrants to keep most client records for at least seven years from the date the record was created.
The 'client-focused reforms' (CFRs) introduced by the CSA primarily strengthened which obligation?
Answer: Registrants' duty to prioritize client interests when making recommendations
The CSA's Client Focused Reforms explicitly require registrants to prioritize client interests over their own or their firm's when making recommendations, strengthening the existing suitability framework.
Which of the following would constitute 'insider trading' in the context of a mutual fund company?
Answer: An employee trading in a security based on material non-public information about a fund holding
Insider trading occurs when someone trades securities using material information that has not been publicly disclosed, which is illegal under Canadian securities law.
Under Canadian regulations, a mutual fund is considered 'non-redeemable' (closed-end) if:
Answer: It only accepts new investors at IPO and investors can only exit by selling units on a stock exchange
Non-redeemable (closed-end) funds raise capital at launch and do not continuously redeem units; investors liquidate by selling units in the secondary market on a stock exchange.
When a client complains about a registrant's conduct, the dealer firm is required under MFDA rules to:
Answer: Acknowledge the complaint promptly and investigate it in accordance with complaint handling procedures
MFDA rules require dealer firms to acknowledge complaints promptly, conduct a fair investigation, and provide the client with a substantive written response within 90 days.
A registrant who engages in 'front-running' by placing personal trades ahead of large client orders is violating which core ethical principle?
Answer: Fair dealing and client priority
Front-running exploits advance knowledge of client orders for personal gain, directly violating the duty to deal fairly and to prioritize client interests over the registrant's own.