Home/ Questions/Q 491970
Next
In Process

SSEI QForum Latest Questions

Aditi Mittal
  • 0
Advanced
Asked: 2023-09-21T17:55:18+05:30 In:

Ethics CFA L2

  • 0

Screenshot 2023-09-21 at 5.45.20 PM

Hi

Can someone pls explain the solution? Don’t understand the allocation of IPO shares on pro-rata basis to clients and not managers. Isn’t this a violation to Suitability if shares are allocated to all clients irrespective of their mandate to the investment manager.

Thanks.

Share

    Sorry, you do not have permission to answer to this question.

    1 Answer

    1. Finance
      The Official Nerd

      Aiklin’s IPO allocation policy allows investment managers to decide how to allocate IPO shares among their clients, which means that some clients may receive a larger allocation while others may receive none or a smaller allocation. This approach can potentially disadvantage certain clients and may not align with their specific investment mandates or suitability.

      In this context, answer choice “B. No, because the IPO policy disadvantages certain clients” is indeed correct. The IPO policy disadvantages certain clients by allowing investment managers to have discretion in allocating shares, potentially leading to unequal treatment of clients in the distribution of IPO shares.

      • 0