Ethics and Professional Conduct Flashcards

What constitutes insider trading under Canadian securities law?

Answer: Trading securities based on material non-public information obtained through a position of trust or confidence

Insider trading involves buying or selling securities based on material information that has not been publicly disclosed, obtained through a privileged or confidential relationship.

What is 'front-running' in securities markets?

Answer: A dealer trading for their own account ahead of executing a large client order, knowing the client's order will likely move the market price

Front-running is the prohibited practice of a dealer or advisor executing trades in their own account ahead of a pending client order, exploiting advance knowledge that the client's large order will affect the security's price.

What does 'best execution' require of a registered investment dealer?

Answer: Taking reasonable steps to achieve the most advantageous execution terms for the client considering price, speed, likelihood of execution, and other relevant factors

Best execution requires dealers to take reasonable steps to achieve the most favorable outcome for the client when executing orders, considering multiple factors such as price, speed, and likelihood of execution.

Under CIRO's complaint handling rules, within what maximum timeframe must a registered firm provide a substantive response to a client complaint?

Answer: 90 calendar days

CIRO rules require registered firms to provide a substantive written response to client complaints within 90 calendar days of receiving the complaint.

Which organization provides independent dispute resolution services for Canadian investors who cannot resolve complaints with their investment dealer?

Answer: The Ombudsman for Banking Services and Investments (OBSI)

OBSI is an independent, not-for-profit organization that investigates and helps resolve disputes between investors and their investment firms when internal complaint processes have been exhausted.

What ethical obligation requires an advisor to deal with clients honestly, fairly, and in good faith?

Answer: The fair dealing obligation

The fair dealing obligation requires registrants to deal with clients honestly, fairly, and in good faith, ensuring that client interests are given appropriate consideration in all dealings.

What is 'market manipulation' in the context of Canadian securities regulation?

Answer: Engaging in transactions or conduct intended to create a false or misleading appearance of trading activity or market price

Market manipulation involves intentional conduct designed to create an artificial appearance of supply, demand, or market price for a security, which misleads other investors and distorts market integrity.