2013, Study Session # 2, Reading # 6 THE ASSET MANAGER CODE There are six risk components to the asset manager code.. PREVENTING VIOLATIONS Loyalty to Clients Investment Process & Acti
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2013, Study Session # 2, Reading # 6
THE ASSET MANAGER CODE
There are six risk components to the asset manager code
Ethical responsibilities related to six components are:
Always act ethically & professionally
Act independently & objectively
Perform actions using skill, diligence & competence
Act in best interest of the client
Communicate with clients on a regular & accurate manner
Legal & regulatory compliance
PREVENTING VIOLATIONS
Loyalty to Clients Investment Process & Actions
Put the client’s interest before your own
Maintain confidentiality
Not accept any gift that affects your judgment & objectivity
Design salary arrangements that align the interests of the client with those of manager
Take actions that would not cause any harm to the client
Never engage in market manipulation of security prices
Fair dealing with all clients
Thoroughly investigate & research different investment options
Trading Risk Management, Compliance & Support
Don’t trade or cause others to trade on insider information
Seek best execution for all trades & equitable allocation among clients
Use soft $ commission to provide products & services that aids the portfolio manager in investment decision making process
Place client’s trades before your own
Develop policies & procedures for complying with codes &
standards & regulatory requirements
Appoint a compliance officer & establish a firm wide system for identifying & measuring manager’s risk position
Complete & accurate portfolio information disseminated to clients
Maintain records
Contingency plan in the event of a natural disaster
Disclosure Performance & Valuation
Report investment results in an accurate manner without misrepresentation & using fair MV
Guideline ⇒ follows GIPS
In order to avoid conflict of interest, transfer the responsibility of valuing asset accounts to an independent third party
Disclose the following to the client:
Any information needed to make an informed decision regarding the investment manager or the organization
Potential conflict of interest
Any regulatory or disciplinary action taken against the manager or its personnel
The investment decision-making process & fee schedule
Discussion about soft $ commission
Trade allocation procedures & firm-wide risk management processes
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