"morality" exercise:Ethics of investment industry

A is correct. Country sponsors provide an important link between the GIPS Executive Committee, the governing body for the GIPS standards, and the local markets in which investment managers operate.

B is incorrect because the standards are promoted as voluntary.

C is incorrect because the official governing version of the standards is the English version and not the local language version.

C is correct. If the client could prove the firm marketed its code of ethics (i.e., putting the interests of the client first) as a reason to hire the firm and the adviser violated the code, the court may rule in the client’s favor.

A is incorrect because an adviser can still act in a fiduciary manner while benefiting more than the client. This is particularly true when investment returns are unexpectedly negative and the client pays fees to the adviser.

B is incorrect because unethical behavior is not necessarily illegal. However, if the client could prove the firm marketed their code of ethics (i.e., putting the interests of the client first) as a reason to hire the firm and the adviser violated the code, the court may rule in the client’s favor.