Definition of Fiduciary Duty - ANSWER This means that you have a fundamental obligation to:
1. act in the best interests of your clients and to provide
... [Show More] investment advice in your clients' best interests.
2. owe a duty of undivided loyalty and utmost good faith.
3. do not engage in any activity in conflict with the interest of any client, and you should take steps reasonably necessary to fulfill your obligations.
4. employ reasonable care to avoid misleading clients and you must provide full and fair disclosure of all material facts to your clients and prospective clients.
5. define "material" if a reasonable investor would consider them to be important.
6. eliminate, or at least disclose, all conflicts of interest that might incline you — consciously or unconsciously — to render advice that is not disinterested. If you do not avoid a conflict of interest that could impact the impartiality of your advice, you must make full and frank disclosure of the conflict.
7. do not use client's assets for your own benefit or benefit of other clients without consent of client first.
8. departure of any of these requirements would be "FRAUD".
What are the required contents of the Code of Ethics - ANSWER 1. Set for the firm's standards of conduct for its supervised persons.
2. Must require access persons to submit to the adviser's CCO or other persons designated, the
a) Initial Holdings Report of each bank or broker within 10 biz days and current no more than 45 days old.
b) Quarterly transaction reports within 30 days after end of quarter.
c) Annual Holdings Report of all holdings
d) obtain prior approval before investing in limited offerings and initial public offerings
In which the access person has any direct or indirect beneficial ownership sharing the same household and members of the immediate family.
Define Access Person - ANSWER A subset of a supervised person that has
1. access to nonpublic information regarding a client's transactions
2. non public information regarding the holdings of the adviser's mutual funds
4. are involved in making security recommendations to clients or have access to such recommendations.
5. if your firm is an adviser then all directors, officers, and partners are access persons
6. in some cases admin, client service reps, and technical (IT) persons.
Define Reportable Securities - ANSWER open-end mutual fund advised or sub-advised
open-end ETF
Options and Futures are covered securities and must be reported under the COE.
What other best practices does the SEC recommend for personal trading? - ANSWER Pre-clearance
Blackout periods
use or restricted lists
prohibitions on short term trading
Whistleblower Provision - ANSWER The code of ethics must include the requirement of supervised persons to report any violations of the code to CCO or designated person. Employees are required to self-report violations
When must the COE be distributed? - ANSWER 1. Annually to supervised persons at the time of employment, they must receive a copy and anytime there is an amendment.
2. To any client or prospective client upon request. [Show Less]