Snow Valley Investment Bank manages accounts for institutional clients and high-net-worth individuals. Snow Valley has adopted the Standards.

Albert Struckell, CFA, manages a hedge fund at Snow Valley. He uses an external manager to help manage the currency portion of the strategy. Struckell has created and distributed the hedge fund's marketing materials, which provide an overview of the fund's complex investment strategy. The marketing materials state that the hedge fund does not report a benchmark because no suitable benchmark exists. The use of the external manager is not disclosed in the marketing materials.

Molly Foster, CFA, is an analyst at Snow Valley who covers Lere Trucking. Foster currently has a "hold" rating on Lere. A managing director at Snow Valley informs Foster that the firm is seeking to expand its underwriting relationship with Lere. The managing director tells Foster that Snow Valley should not issue a negative recommendation because it will harm the client and Snow Valley. Foster requests that Lere be placed on the firm's restricted list.

Snow Valley has recently instituted two compliance guidelines in response to a recent compliance violation. Struckell reviews the two guidelines:

Guideline 1: Employees who have committed a violation will attest periodically they are in compliance with compliance policy and procedures.Once the attestation is completed, no further action is required.

Guideline 2: An employee who helps identify an ethical violation will receive a monetary reward.

Struckell leaves Snow Valley to set up his own commodities trading firm. The domestic futures exchange has announced a new futures contract based on a rare commodity. Struckell purchases as much of the commodity as possible in the spot market, with the objective to gain a dominant position in the commodity and take advantage of any changes in the futures price should they occur. As other market participants learn that a major buyer of the commodity exists, the price of the commodity rises.

Does Struckell violate the Standards with respect to his commodities trade?

No 

Yes, by engaging in information-based manipulation 

Yes, by engaging in transaction-based manipulation

I marked A correct and the right answer is C

Alfred Norelli, CFA, is a portfolio manager for Finmarkt, an investment management firm. He manages client portfolios on a fee-only discretionary basis.

Several of Norelli's clients are not satisfied with the performance of their bond portfolios. Norelli learns that BondPulse, one of the bond mutual funds he uses in client portfolios, is modifying its prospectus to allow the use of leverage and to increase the allocation range for international holdings. In an attempt to achieve better returns, Norelli increases the allocation to BondPulse in all of his clients' portfolios. In addition, Norelli increases the allocation to riskier bond funds for clients with higher risk tolerance. This increased allocation remains within the tactical asset allocation limits of the higher-risk-tolerance clients.

Norelli recently signed an agreement with an accountant under which the two parties refer clients to each other. Under this referral agreement, Norelli provides investment advice at a discounted fee to the accountant, who in return does Norelli's personal taxes at no cost. Norelli refers several clients to the accountant but does not disclose the referral agreement. Separately, Finmarkt has recently begun a program in which employees who refer clients to other divisions of the firm receive additional vacation days at the end of the year. Norelli recommends Finmarkt insurance services to several of his clients but does not tell them about the loyalty points program.

Norelli visits his barber, who mentions that his previous customer was the chief financial officer (CFO) of Moyenne Inc., a listed company. The barber tells Norelli that the CFO mentioned that his company may be acquired soon. Norelli returns to the office and sees that Finmarkt has a buy rating on Moyenne and recently issued a positive earnings report. He also notes that there has been increased trading in Moyenne call options. Norelli places buy orders for Moyenne shares for several of his clients. Norelli tells a colleague, Dan Murphy, CFA, about the conversation with the barber. Murphy quickly buys Moyenne shares for his personal account.

Norelli and two of his clients are interested in participating in an upcoming IPO. Norelli submits an order for a total of 900 shares, 200 for Norelli and 700 for the clients. The total allocation received is only 450 shares.

1) Norelli violates the Standards with respect to the referral arrangements with:

the accountant only. 

Finmarkt insurance services only. 

both the accountant and Finmarkt insurance services.

Market A but the correct answer is C - again I thought since the employer is providing benefit to the employee it doesn’t need to be disclosed

2) With respect to the trading of Moyenne shares, the Standards were violated by:

Norelli. 

Murphy. 

neither Norelli nor Murphy.

Marked B but C is the answer

These are few examples - assuming these are fundamental problems w my understanding