After the meeting, Locke is not satisfied with Black’s comments and decides that further action is required. He also decides that he will allow NGM to continue to manage Fund assets until he finishes his evaluation. This decision is based on the superior returns of the NGM-managed assets, the significant diversification this portfolio adds to the Fund, and the political implications of firing the local money manager.
Trade Allocation
Locke “Provide written trade allocation procedures consistent with the CFA Institute Standards of Professional Conduct.”
Black “I will mail you a copy of our new procedures stating that trade allocations must be reviewed at the end of each month against the client’s IPS. It also says that interest will be credited to accounts that have been incorrectly allocated shares and debited from those accounts that should have received shares.”
The next week, Locke calls Black and outlines several conditions that must be fulfilled for NGM to continue as a manager for the Fund. One of the conditions outlined relates to trade allocation.
With regard to Locke’s condition regarding trade allocation, does Black’s response violate the CFA Institute Standards of Professional Conduct with respect to allocation reviews and interest adjustments, respectively?
A Yes
B No, it violates the Standards only with respect to allocation reviews
C No, it violates the Standards only with respect to interest adjustments
答案：A
