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Answer: requires revision to ensure client trades take precedence.
**Explanation:** Standard VI(B) of the CFA Institute Code of Ethics and Standards of Professional Conduct mandates that client transactions must take precedence over transactions made for the member's or candidate's firm or personal accounts. In this scenario, Dazong's rotating trade allocation method does not guarantee client priority, as his personal trades may receive equal or higher priority at times. This violates the Standards. While disclosure (Option C) is important, it does not rectify the failure to prioritize client trades. Therefore, the procedure must be revised to comply with Standard VI(B).
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Wang Dazong, CFA, is a sole proprietor investment advisor who trades the same securities as his clients and uses a rotating trade allocation method to ensure fairness. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, Dazong's allocation procedure:
A
complies with the Standards.
B
requires revision to ensure client trades take precedence.
C
should be disclosed and written approval received from clients.