"morality" exercise:Priority of Transactions

B is correct because Barrett’s client base is made up of a small number of large institutions so stating in the advertisement that his client base is a larger number is a misrepresentation and a violation of Standard I(C). In addition, since the advertisement focuses only on the benefits and does not mention the potential risks of these investments it is also potentially misleading to clients. 

A is incorrect since the advertisement misrepresents the size of Barrett’s client base. The advertisement is also potentially misleading to clients as it focuses only on the benefits and does not mention the potential risks of these investments.

 C is incorrect because this Standard has not been violated

B is correct because the research analyst has not violated Standard I(C)–Misrepresentation because he has not knowingly made any misrepresentations related to investment analysis, recommendations, actions, or other professional activities. The research analyst has correctly attributed the model to both the quantitative analyst and to himself as he has revised the original model. Research developed while employed by a firm are the property of the firm, and the analyst is in violation of Standard V(C)–Record Retention as members and candidates must develop and maintain appropriate records to support their investment analysis, recommendations, actions, and other investment-related communications with clients and prospective clients. As a general matter, records created as part of a member’s or candidate’s professional activity on behalf of his or her employer are the property of the firm. The analyst also violated Standard VI(B)–Priority of Transactions by taking advantage of his knowledge of the stock’s value before allowing his employer to benefit from that information. 

A is incorrect because the analyst is in violation of Standard V(C)–Record Retention as members and candidates must develop and maintain appropriate records to support their investment analysis, recommendations, actions, and other investment-related communications with clients and prospective clients. As a general matter, records created as part of a member’s or candidate’s professional activity on behalf of his or her employer are the property of the firm. 

C is incorrect because by taking advantage of his knowledge of the stock’s value before allowing his employer to benefit from that information, the analyst violated Standard VI(B)–Priority of Transactions