All RE5 questions
Code of Conduct Adhere to the specific Codes of Conduct
A client instructs her adviser on Monday to buy a large block of a thinly traded share. Expecting the order to push the price up, the adviser first buys the share for his own account and places her order on Tuesday. Which statement best describes the breach of the General Code?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) He failed to disclose a conflict of interest, which would have been acceptable had he told her beforehand.
- b) He committed no breach, provided the client still received the share at the market price on Tuesday.
- c) He breached only the duty to execute instructions promptly, because one day of delay is unreasonable.
- d) He dealt for his own benefit on advance knowledge of a pending client transaction.Correct
Why this is the answer
A provider must execute client instructions as soon as reasonably possible, give the client's interests priority over its own, and may not deal in a product for its own benefit on the basis of advance knowledge of pending client transactions. Disclosure would not make front-running acceptable, and the breach is wider than mere delay.
Want to test yourself on 700+ more questions like this?
Start your free RE5 simulator today — timed mock exams, full answer explanations and cloud-synced progress tracking.
More Code of Conduct questions
- A broker has contracts with three insurers and may place business only with them. She t…
- A broker receives a client's premium cheque at 16:00 on the Thursday before Good Friday…
- A risk policy provides that the premium will increase every year. What does the General…
- A representative makes the required product disclosures to a client orally on 14 May, a…