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NEW QUESTION: 1
John Green, CFA, is a sell-side technology analyst at Federal Securities, a large global investment banking and advisory firm. In many of his recent conversations with executives at the firms he researches, Green has heard disturbing news. Most of these firms are lowering sales estimates for the coming year. However, the stock prices have been stable despite management's widely disseminated sales warnings. Green is preparing his quarterly industry analysis and decides to seek further input. He calls Alan Volk, CFA, a close friend who runs the Initial Public Offering section of the investment banking department of Federal Securities.
Volk tells Green he has seen no slowing of demand for technology IPOs. "We've got three new issues due out next week, and two of them are well oversubscribed." Green knows that Volk's department handled over 200 IPOs last year, so he is confident that Volk's opinion is reliable. Green prepares his industry report, which is favorable. Among other conclusions, the report states that "the future is still bright, based on the fact that 67% of technology IPOs are oversubscribed." Privately, Green recommends to Federal portfolio managers that they begin selling all existing technology issues, which have "stagnated," and buy the IPOs in their place.
After carefully evaluating Federal's largest institutional client's portfolio, Green contacts the client and recommends selling all of his existing technology stocks and buying two of the upcoming IPOs, similar to the recommendation given to Federal's portfolio managers. Green's research has allowed him to conclude that only these two IPOs would be appropriate for this particular client's portfolio. Investing in these IPOs and selling the current technology holdings would, according to Green, "double the returns that your portfolio experienced last year." Federal Securities has recently hired Dirks Bentley, a CFA candidate who has passed Level 2 and is currently preparing to take the Level 3 CFA® exam, to reorganize Federal's compliance department.
Bentley tells Green that he may be subject to CFA Institute sanctions due to inappropriate contact between analysts and investment bankers within Federal Securities. Bentley has recommended that Green implement a firewall to rectify the situation and has outlined the key characteristics for such a system.
Bentley's suggestions are as follows:
1. Any communication between the departments of Federal Securities must be channeled through the compliance department for review and eventual delivery. The firm must create and maintain watch, restricted, and rumor lists to be used in the review of employee trading.
2. All beneficial ownership, whether direct or indirect, of recommended securities must be disclosed in writing.
3. The firm must increase the level of review or restriction of proprietary trading activities during periods in which the firm has knowledge of information that is both material and nonpublic.
Bentley has identified two of Green's analysts, neither of whom have non-compete contracts, who are preparing to leave Federal Securities and go into competition. The first employee, James Ybarra, CFA, has agreed to take a position with one of Federal's direct competitors. Ybarra has contacted existing Federal clients using a client list he created with public records. None of the contacted clients have agreed to move their accounts as Ybarra has requested. The second employee, Martha Cliff, CFA, has registered the name Cliff Investment Consulting (CIC), which she plans to use for her independent consulting business.
For the new business venture, Cliff has developed and professionally printed marketing literature that compares the new firm's services to that of Federal Securities and highlights the significant cost savings that will be realized by switching to CIC. After she leaves Federal, Cliff plans to target many of the same prospects that Federal Securities is targeting, using an address list she purchased from a third-party vendor. Bentley decides to call a meeting with Green to discuss his findings.
After discussing the departing analysts. Green asks Bentley how to best handle the disclosure of the following items: (1) although not currently a board member. Green has served in the past on the board of directors of a company he researches and expects that he will do so again in the near future; and (2) Green recently inherited put options on a company for which he has an outstanding buy recommendation.
Bentley is contemplating his response to Green.
According to CFA Institute Standards of Professional Conduct, which of the following statements regarding Green's recommendation to Federal Securities' clients is TRUE?
A. Green violated the Standards by failing to preserve the confidentiality of Federal Securities' investment banking clients.
B. Green violated the Standards by making a material misrepresentation in his report to Federal Securities' clients.
C. Green did not violate the Standards since he made a suitable recommendation in the best interest of Federal Securities' clients.
Answer: B
Explanation:
Explanation/Reference:
Explanation:
Green has taken a small number of oversubscribed IPOs to represent the entire market for technology IPOs. This is clearly a misrepresentation of the true market situation. Thus, Green has violated Standard 1 (C) Misrepresentations which prohibits such misstatements of fact. Also, IPOs may not be suitable for all accounts, but Green has recommended that all of Federal Securities' portfolio managers add the IPO shares to their portfolios. Green did not violate the confidentiality of the investment banking clients since he was unaware of, and did not disclose, any details of the upcoming IPOs, Also, Green was not in possession of any material nonpublic information. (Study Session I, LOS2.a)
NEW QUESTION: 2
Given:
What is the result?
A. A B C
B. C B A
C. Compilation fails at line n1 and line n2
D. C
Answer: A
NEW QUESTION: 3
Your production database PROD uses file system storage. You want to migrate storage including the Fast Recovery Area for the PROD database to Oracle Automatic Storage Management (ASM) by using RMAN.
You back up the entire database.
What should the next step be in this migration process?
A. disabling Oracle Flashback Database if enabled
B. enabling row movement for the database
C. opening the database in exclusive mode
D. placing all tablespaces in read-only mode
Answer: A
Explanation:
Explanation
References: https://docs.oracle.com/cd/E11882_01/server.112/e18951/asm_rman.htm#OSTMG89995