[sanjay shekarParticipant]

Example 12 (Misrepresentation of Information): Tom Stafford is part of a team within Appleton Investment Management responsible for managing a pool of assets for Open Air Bank, which distributes struc

Example 12 (Misrepresentation of Information): Tom Stafford is part of a team within Appleton Investment Management responsible for managing a pool of assets for Open Air Bank, which distributes structured securities to offshore clients. He becomes aware that Open Air is promoting the structured securities as a much less risky investment than the investment management policy followed by him and the team to manage the original pool of assets. Also, Open Air has procured an independent rating for the pool that significantly overstates the quality of the investments. Stafford communicates his concerns to his supervisor, who responds that Open Air owns the product and is responsible for all marketing and distribution. Stafford’s supervisor goes on to say that the product is outside of the US regulatory regime that Appleton follows and that all risks of the product are disclosed at the bottom of page 184 of the prospectus.

Is this a violation of  standard 1-c ?

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[Madhu Chandarasekaran, CFAKeymaster]

Hi Sanjay, Thanks for this question.

 

Tom Stafford himself didn’t violate Standard I-C,  (Misrepresentation) in fact he highlighted the issue to his Supervisor. However, his Supervisor

Hi Sanjay, Thanks for this question.

 

Tom Stafford himself didn’t violate Standard I-C,  (Misrepresentation) in fact he highlighted the issue to his Supervisor. However, his Supervisor has violated. So Stafford will have to contact his counsel/attorney on next steps.

 

 

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• This reply was modified 7 months ago by Madhu Chandarasekaran, CFA.

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