Question 1 of 30
Aisha, a registered investment advisor, manages discretionary accounts for two clients, Javier and Chloe. Aisha believes that selling shares of \"TechForward Inc.\" from Javier\'s portfolio and buying them for Chloe\'s portfolio would be beneficial for both clients. Javier\'s portfolio needs to reduce its exposure to the technology sector, while Chloe\'s portfolio is underweight in technology and Aisha anticipates TechForward Inc. will soon experience a short-term price increase. Aisha executes the cross trade at the current market price, without explicitly disclosing to either client that she is acting as principal in the transaction (i.e., selling shares from her own inventory to Chloe). Both clients\' accounts show a profit immediately after the trade. Under UMIR and principles of fiduciary duty, which of the following statements best describes Aisha\'s actions?
Aisha violated UMIR and breached her fiduciary duty because she acted as principal without obtaining informed consent and demonstrating the trade was in both clients' best interests, even though the trade was immediately profitable.
Aisha acted appropriately because the trade was executed at the prevailing market price and both clients' portfolios benefited immediately, fulfilling her fiduciary duty.
Aisha's actions are permissible under UMIR as long as the trade volume did not exceed 5% of the total trading volume of TechForward Inc. on that day.
Aisha's actions are only questionable if either Javier or Chloe files a formal complaint with the Canadian Investment Regulatory Organization (CIRO) within 30 days of the trade execution.

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