Ethics, Professional Standards, and Recordkeeping/Reporting Obligations
Scope
This domain tests ethics, professional standards, and the records and reports that make conduct auditable. Expect questions on confidentiality, conflicts, complaints, and regulatory reporting.
Core rules
- Act with integrity, competence, diligence, and fairness; place client interests above personal gain and disclose or manage conflicts.
- Keep accurate, complete, and timely records: account documents, order tickets, confirmations, correspondence, complaints, AML reviews, and supervisory approvals.
- Preserve records for the required retention period and make them readily retrievable. Electronic records are acceptable if controlled and reproducible.
- Report as required: trade and position information to the PSE and SCCP, suspicious transactions to the AMLC, and material complaints or regulatory matters internally and to regulators when required.
- Confidentiality protects client information from misuse but does not block lawful regulatory examinations or AML reporting.
Worked example
A client calls to complain that a trade was unauthorized and asks the salesman to “fix the ticket” by changing the time. The salesman must not alter the record. He should document the complaint, preserve the original ticket and call log, escalate to compliance, and cooperate with the investigation. Backdating or recreating a ticket destroys the audit trail and compounds the conduct breach.
Traps
Do not treat confidentiality as a shield against regulators or AML reporting. Do not keep required records only on a personal phone or email. A verbal instruction still needs a contemporaneous record, and a complaint is not resolved merely because the client calms down.