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Answer: Members should establish blackout periods prior to executing trades for clients.
According to Standard VI(B), Priority of Transactions, investment personnel involved in the investment decision-making process should establish blackout periods prior to trades for clients. This prevents managers from exploiting their knowledge of client activity by "front-running" client trades (i.e., trading for their personal accounts before trading for client accounts). This practice ensures fairness and compliance with ethical standards.
Author: LeetQuiz Editorial Team
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Which of the following procedures is recommended for compliance with the Standard regarding priority of transactions?
A
Members should disclose personal transactions related to shares in their firm's research universe to clients upon request.
B
Members should establish blackout periods prior to executing trades for clients.
C
Members should treat fee-paying family accounts in which they have beneficial ownership identically to their personal accounts.
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