HKSI LE Paper 6 Past Paper (2)

HKSI LE Paper 6 (Dec 2006) - Q&A 21~40 (with explanations):

21(D) - (III) is wrong because the required paid-up capital and reserves is HK$1 million instead.

22(D) - All of those persons should be checked in accordance with the Client Identity Rules under the Code of Conduct.

23(D) - (I) is wrong because a code of conduct is not statutory and thus any breach would not lead to judicial proceedings.

24(B) - (I) & (III) are most related to the principle of honesty and fairness. (II) is related to the principle of information for clients. (IV) is related to the principle of information about clients.

25(C) - (I) & (II) are wrong because entering into a written agreement with a client is necessary. For subscription of authorized CIS, the investor enters into the agreement by the application form accompanied by the offering document.

26(D) - (III) is wrong because the Code does not require the keeping of all allocation records permanently.

27(D) - (I) is wrong because staff of a fund manager may not deal for his personal account within one trading day before a forthcoming recommendation in any circumstance.

28(C) - (I) & (IV) are requirements set out in the UT Code in respect of trustees/custodians. (II) is wrong because there is no requirement that the review must be carried out by qualified members of AIMR. (III) is wrong because the terms of reference is incorporated in the review engagement letter instead.

29(B) - (III) is wrong because it is not reasonable to require trustees to indemnify the MPF scheme against loss.

30(D) - (II), (III) & (IV) are typical examples of suspicious transactions. (I) is wrong because there is no ground to pinpoint property deals in such OECD countries like Australia, Canada and the United States.

31(A) - Both (I) and (III) make sense. (II) is wrong because executive share option scheme may create corporate governance problem. (IV) is wrong because the ICG does not specify such detailed requirement.

32(D) - (I) & (II) are good corporate governance standards. (III) & (IV) describe what MPFA is doing.

33(C) - (III) is wrong because no specific threshold for transactions subject to JFIU reporting has been specified.

34(D) - If only two options could be chosen, then (I) & (II) are least essential as features of corporate governance which is more grounded on independent supervision (say, by non-executive directors or audit committee).

35(C) - (II) is wrong because it can't be an initiative taken by the Government and the SFC.

36(C) - (A), (B) & (C) are under the general considerations of the Guidelines, but (C) is considered by SFC as more serious. (D) is under the specific considerations as one of the "other circumstances", which appears to be less serious than (C).

37(D) - Only (III) & (IV) are included in the definition of market misconduct under the SFO.

38(B) - This question is examining common sense. Obviously if one of the options has to be dropped out (all answers contain only 3 options), it should be (III) - pursuing short term returns is usually not a good practice.

39(B) - Only (I) & (III) are defined as offences of "market misconduct" under Part XIV of the SFO.

40(D) - Directors, employees, substantial shareholders (holding 5% or above) of and persons having access to relevant information through business / professional relationship with a listed corporation and its related corporation are all defined as "connected persons".