IFC Regulation and Ethical Responsibilities 5

Question 1

Under the Client Relationship Model (CRM2) requirements, dealers must provide clients with an annual report that discloses:

Accepted Answer

All charges and compensation paid by the client and portfolio performance

Answer

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.

Question 2

A registrant's obligation to maintain client records under NI 31-103 generally requires records to be kept for a minimum of:

Accepted Answer

7 years

Answer

NI 31-103 requires registrants to keep most client records for at least seven years from the date the record was created.

Question 3

The 'client-focused reforms' (CFRs) introduced by the CSA primarily strengthened which obligation?

Accepted Answer

Registrants' duty to prioritize client interests when making recommendations

Answer

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.

Question 4

Which of the following would constitute 'insider trading' in the context of a mutual fund company?

Accepted Answer

An employee trading in a security based on material non-public information about a fund holding

Answer

Insider trading occurs when someone trades securities using material information that has not been publicly disclosed, which is illegal under Canadian securities law.

Question 5

Under Canadian regulations, a mutual fund is considered 'non-redeemable' (closed-end) if:

Accepted Answer

It only accepts new investors at IPO and investors can only exit by selling units on a stock exchange

Answer

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.

IFC - Investment Funds in Canada Practice Test

IFC - Investment Funds in Canada Practice Test

IFC Regulation and Ethical Responsibilities 5