Conduct and Practices Handbook (CPH) Questions With 100% Verified Answers Solved.

Formal Take-over Bid - correct answer An offer made to the security holders of a company to purchase the voting securities of a company which, with the offeror's already-owned securities, will in total exceed 20% of the outstanding voting securities of the company. Compliance - correct answer Compliance is following the rules, whether those rules are legal and regulatory requirements or internal policies. Confidentiality - correct answer The ethical principle that a securities industry professional will hold secret all information relating to a client and the client's account unless the client consents to its disclosure, or a formal request is made by the appropriate regulators Conflict of Interest - correct answer A situation in which a registrant's personal or financial interests conflict with those of a client or the registrant's dealer member. In cases of potential or actual conflict of interest, a client's interests must be given priority and the conflict should be disclosed. Discretionary Account - correct answer A securities account for which the client has given a dealer member specific written authorization to make decisions regarding the security, price, quantity or timing of orders in the account. Due Diligence - correct answer Investigation into and verification of the details of a potential investment, such as an examination of operations and management, and the verification of material facts. Duty of Care - correct answer An IA's duty to his client to ensure that he/she does everything "reasonably practicable" to protect the client's assets. This involves devoting the time and attention necessary to make informed decisions. Also known as Standard A Fiduciary Duty - correct answer A legal term that describes a high degree of duty of care. Criteria that may be used to determine whether a trust exists in an IA-client relationship include a high degree of reliance by the client on the IA's advice and the vulnerability of the client. A similar concept, "Contract of Mandate", exists in Quebec under civil law. Know Your Client (KYC) Rule - correct answer The cardinal rule in making investment recommendations. The IA must know all relevant information about every client and every order to ensure that his/her recommendations to clients are suitable. Personal Information Protection and Electronic Documents Act (PIPEDA) - correct answer The Act that governs each dealer member's information-gathering processes and regulates how firms may use and disclose the personal information that is collected in the course of doing business. Registrant Standards of Conduct - correct answer The Standards of Conduct amplify the Code of Ethics and set out certain specifics of required behavior. These requirements are based in large part on the provincial Securities Acts and the SRO rules. Suitability - correct answer A registrant's major concern in making investment recommendations. Unless a suitability exemption applies, all information about a client and a security must be analyzed to determine whether a particular investment is suitable for a client. Unsolicited Order - correct answer An order entered by a client where neither the client's IA or his/her dealer member recommended the order. Autorité des marchés financiers (Financial Services Authority) (AMF) - correct answer The body that administers the regulatory framework surrounding Québec's financial sector securities sector, the distribution of financial products and services sector, the financial institutions sector and the compensation sector. Canadian Investor Protection Fund (CIPF) - correct answer A fund that protects investors against the insolvency of any dealer member. It is financed by the IIROC and the exchanges (except ICE Futures Canada), who are collectively referred to as Sponsoring Self-Regulatory Organizations (SSROs) through quarterly assessments on dealer members. Disclosure - correct answer One of the principles of securities regulation in Canada. This principle entails full, true and plain disclosure of all material facts necessary to make reasoned investment decisions. Financial Transactions Reports Analysis Centre of Canada (FINTRAC) - correct answer FINTRAC receives, analyzes, assesses and discloses financial intelligence on suspected money laundering, terrorist financing, and threats to the security of Canada. Integrated Market Enforcement Teams (IMETs) - correct answer An initiative of the RCMP and the federal government to detect, investigate and deter capital markets fraud. IMETs are composed of police, lawyers and other investigative experts through branches in Toronto, Vancouver, Montreal and Calgary. They are jointly managed by the RCMP and Justice Canada, and work closely with securities regulators such as the IIROC and the MFDA, as well as other federal and provincial authorities. Joint Serious Offences Team (JSOTs) - correct answer JSOT is an enforcement partnership between the OSC, the RCMP Financial Crime program and the Ontario Provincial Police Anti-Rackets Branch. JSOT investigates and prosecutes serious violations of the law using provisions of the Securities Act (Ontario) and Criminal Code. Staff work with police agencies and the Ministry of the Attorney General to bring more cases before the courts and to send a strong message to those who might harm the public. Investment Industry Association of Canada (IIAC) - correct answer IIAC is a member-based, advocacy association that advances the growth and development of the Canadian investment industry. It is not a regulatory body. Its member firms range in size from small regional firms to large organizations that employ thousands of individuals across the country The IIAC's mandate is fourfold: Advocacy, Industry Profile, Member Support, and Market Advancement. Investment Industry Regulatory Organization of Canada (IIROC) - correct answer The national self-regulatory organization overseeing all investment dealers and trading activity on equity and debt marketplaces in Canada. IIROC is responsible for enforcing the rules and regulations regarding sales, business and financial practices and trading activities of individuals and firms under IIROC's jurisdiction. It also develops recommendations to amend existing rules, establishes new rules and interprets existing rules. Mutual Fund Dealers Association (MFDA) - correct answer The Self-Regulatory Organization that regulates the distribution (dealer) side of the mutual fund industry in Canada. Office of the Superintendent of Financial Institutions (OSFI) - correct answer The primary regulator of federally chartered financial institutions and federally administered pension plans. OSFI supervises and regulates all banks, and all federally incorporated or registered trust and loan companies, insurance companies, co-operative credit associations, fraternal benefit societies and pension plans. Regulator - correct answer A general term referring to the Securities Administrators and Self-Regulatory Organizations (SROs) collectively. Self-Regulatory Organization (SRO) - correct answer An organization recognized by the Securities Administrators as having powers to establish and enforce industry regulations. Its main functions are to protect investors, maintain fair, equitable and ethical practices in the industry and ensure conformity with securities legislation. Universal Market Integrity Rules (UMIR) - correct answer A common set of equities trading rules designed to ensure fairness and maintain investor confidence. These rules create the framework for the integrity of trading activity on marketplaces and allow for the competitive operation of exchanges, quotation and trade reporting systems (QTRSs) and alternative trading systems (ATSs) in Canada. The marketplaces that are subject to UMIR are the Aequitas NEO Exchange, NEO Book, Lit Book, Crossing Facility, Canadian Securities Exchange (CSE), Instinet Canada Cross Limited (ICX), Liquidnet Canada Inc. (Liquidnet), Nasdaq CX (NCX), Nasdaq CX2, OMEGA ATS, Lynx ATS, Toronto Stock Exchange (TSX), TSX Venture Exchange (TSXV), Alpha Exchange, a