) GIVEN THE BOARD'S INTENDED PURPOSE FOR STARTING THE FUND, WHICH O...

1.) Given the board's intended purpose for starting the Fund, which of the following

principles of conduct under the Asset Manager Code of Professional Conduct is least

likely violated?

A. Act in a professional and ethical manner at all times.

B. Uphold the rules governing capital markets.

C. Act for the benefit of clients.

Answer = B

"Asset Manager Code of Professional Conduct," Kurt Schacht, Jonathan J. Stokes, and

Glenn Doggett

General Principles of Conduct: 1, 2, and 6

The board gave instructions to Akinyi to ensure compliance with capital markets

regulations, thus upholding one of the general principles of conduct of the Asset

Manager Code. But the desire for the Fund to act as a buyer of last resort violates the

principle of acting for the benefit of clients (i.e., placing their interests before the firm's

and their own). By putting the firm's interests in front of their clients, the board is not

acting in a professional and ethical manner. Although the Fund may benefit corporate

finance clients and meet the demand of some clients for a fund, not all Fund clients'

interests may be protected by the Fund being the buyer of last resort (i.e., guaranteeing

to buy 100% of the corporate finance clients' private placements if placement to other

potential investors does not succeed). These placements may not meet the Fund's

objectives and risk profile, thus not protecting the interests of the Fund's clients.