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Answer: No, Mak's actions violate the Standard regarding priority of transactions.
According to **Standard VI(B) - Priority of Transactions**, family accounts that are client accounts must be treated like any other firm account. They should neither receive special treatment nor be disadvantaged due to the family relationship. If a member or candidate has beneficial ownership in the account, they may be subject to preclearance or reporting requirements. Mak should have treated his brother's fee-paying account like any other firm account without disadvantaging it. Therefore, his actions are inconsistent with the Standard relating to priority of transactions. **Key Takeaway**: Members must ensure that personal or family accounts are not given preferential treatment or disadvantaged, adhering to the same standards as other client accounts.
Author: LeetQuiz Editorial Team
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Michael Mak, CFA, a portfolio manager, conducts comprehensive research and purchases Advance One Tech (AOT) stock for all suitable client portfolios. Subsequently, he buys AOT shares for his brother's fee-paying account, in which he holds beneficial ownership. After a month, AOT's stock price declines significantly, causing substantial losses for all clients. Are Mak's actions consistent with the CFA Institute Standards of Professional Conduct?
A
Yes, Mak's actions are consistent with all applicable Standards.
B
No, Mak's actions violate the Standard regarding priority of transactions.
C
No, Mak's actions violate the Standard concerning diligence and reasonable basis.
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