2018, Study Session # 2, Reading # “ASSET MANAGER CODE OF PROFESSIONAL CONDUCT” THE ASSET MANAGER CODE There are six risk components to the asset manager code Ethical responsibilities related to six components are: Always act ethically & professionally Act independently & objectively Perform actions using skill, diligence & competence Act in best interest of the client Communicate with clients on a regular & accurate manner Legal & regulatory compliance PREVENTING VIOLATIONS Loyalty to Clients Put the client’s interest before your own Maintain confidentiality Do not accept any gift that affects your judgment& objectivity Design salary arrangements that align the interests of the client with those of the manager Trading Investment Process & Actions Take actions that would not cause any harm to the client Never engage in market manipulation of security prices Fair dealing with all clients Thoroughly investigate & research different investment options Risk Management, Compliance & Support Do not trade or cause others to trade on insider information Seek best execution for all trades & equitable allocation among clients Use soft $ commission to provide products & services that aids the portfolio manager in investment decision making process Place client’s trades before your own Develop policies & procedures for complying with codes & standards & regulatory requirements Appoint a compliance officer & establish a firm wide system for identifying & measuring manager’s risk position Complete & accurate portfolio information disseminated to clients Maintain records Contingency plan in the event of a natural disaster Performance & Valuation Report investment results in an accurate manner without misrepresentation Use fair MV Guideline ⇒ follows GIPS In order to avoid conflict of interest, transfer the responsibility of valuing asset accounts to an independent third party Disclosure Disclose the following to the client: Any information needed to make an informed decision regarding the investment manager or the organization Potential conflict of interest Any regulatory or disciplinary action taken against the manager or its personnel The investment decision-making process & fee schedule Discussion about soft $ commission Trade allocation procedures & firm-wide risk management processes Copyright © FinQuiz.com All rights reserved