CMFAS RES 2B Ethics, Codes & Standards for Derivatives Dealing question: booking losing trades at off-market rates

CMFAS RES 2BEthics, Codes & Standards for Derivatives Dealing

A junior dealer discovers her supervisor has been booking losing trades at off-market rates into a client omnibus account to hide a proprietary loss. Which statements are CORRECT? (a) She should escalate through compliance or the whistle-blowing channel promptly. (b) Staying silent could make her complicit. (c) The supervisor's conduct is a serious integrity breach and likely an offence. (d) She should first confront the supervisor and give him a month to fix it. Which of the following are CORRECT?

A (a), (b) and (c) only
B (d) only
C (a) and (d) only
D (a), (b), (c) and (d)

Show the answer and explanation

Answer: A. (a), (b) and (c) only

Section 5.4.1.1(d) and the whistleblowing exception in 5.4.1.4: misconduct must be reported to the relevant authority; protecting market integrity ranks above loyalty to the employer, and remaining silent may be construed as collusion. Delaying to allow a cover-up worsens the harm.

Common mistake

Escalate now, not after a grace period.

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