Antron is a commodities trader for a regional bank. He often places customer orders for precious metal

futures contracts. Then shortly after placing a customer order, he will place a significantly larger order

on the other side of the trade for his personal account. So for example, when a customer order is a “sell”

order, Antron places a much larger “buy” order from his personal account. Typically, Antron’s orders for

his personal account are placed slightly lower than best price, reducing the likelihood of his order being

filled immediately. As soon as the customer order is executed, Antron cancels his personal trade order.

Antron’s actions are

Corrales manages a hedge fund that seeks out investment opportunities in developing markets. Using

assets of the fund’s investors, the fund hires local companies to serve as “sub-advisers” to explore and

obtain promising investment opportunities and navigate local laws and regulation. The sub-advisers

often have very limited experience as financial consultants or advisers but do have close relationships

and connections with local high-ranking government officials. The payments made by Corrales, through

the sub-advisers, often cover substantial “deal fees” and other expenses that facilitate governmental

support of each investment. Corrales does not require the local business partners to provide details of

their activities or what specific expenses are covered by the fees. Corrales reports these expenditures

to fund investors as operating expenses necessary to the success of the investment. Over several

years, the hedge fund is very successful producing an 18% annual rate of return for its investors. Did

Corrales actions violate the CFA Institute Code of Ethics and Standards of Professional Conduct?

Kapadia is a trader for a asset management company that manages several large global mutual funds.

Kapadia executes the equity buy-and-sell orders for the portfolio managers of one of the company’s

mutual funds. He has discretion to execute the orders at any time during the day depending on market

conditions. Prior to executing the orders, Kapadia contacts several close friends and relatives to

provide them with information on what securities are set to be traded by the mutual fund. In turn, they

make trades that mirror the imminent trades to be executed by Kapadia on behalf of the mutual fund.

Kapadia’s actions are

Meyers Associates is an investment firm providing both advisory and investment banking services.

One of Meyers investment banking clients, IWEB (which manufactures and markets data storage

products and cloud-based software), wants to raise its stock price to facilitate a private offering,

for which it will be using Meyers as its placement agent. George works for Meyers Associates as an

investment adviser. To assist IWEB with its plans, George solicits several of his advisory clients to buy

IWEB stock, and at the same time solicits other clients to sell IWEB stock, frequently effecting matched

orders among his customers. For a 10-day period, these trades represented 48% of the total market

volume of IWEB, and the price of the stock increased from $0.12 to $0.19 and then stabilized at $0.18 for

the next several days. George’s actions are

Hwang is the founder and lead portfolio manager of Tiger Asia Partners (TAP) and Park is a trader for

the firm. TAP is participating in private placements for both Bank of China and China Construction Bank

stock, and the placement agents shared confidential information with Hwang and Park about both

companies. In the days prior to the private placement, Hwang directed Park to make short sales in each

stock. TAP earned $16.2 million by using the discounted private placement shares they received to cover

the short sales. Park’s actions were

Van Wagenen manages the portfolios of high-net-worth clients. He completes an individualized IPS for

each client when opening their account. He then develops a personal asset allocation formula based

on each client’s risk tolerance, financial goals, and so forth. Over the past two days, the domestic

and global equity securities markets fell more than 6%. Fearing a continued drop in the markets, Van

Wagenen liquidates his personal investments and moves to cash until the financial markets stabilize.

But he keeps his clients’ portfolios fully invested pursuant to the directives in their IPS. Van Wagenen’s

actions are

Perkins is the co-owner and chief investment officer of Global Trading Financial (GTF). Perkins’ wife is GTF’s compliance officer. GTF has several dozen retail clients and total assets under management of $70 million. All client assets are managed on a discretionary basis. Perkins frequently makes trades for his clients using an omnibus trading account through a broker/dealer, which allows Perkins to buy and sell securities in a block trade on behalf of multiple clients simultaneously. Perkins regularly allocates the securities purchases to individual client accounts after the market closes. Over one six-month period, Perkins allocates 75% of the profitable trades to nine accounts owned or controlled by Perkins and his wife. At the same time, 82% of the unprofitable trades are allocated to the account of the three largest GTF clients. Perkins’ actions are