Matching
Match each of the following potential conflicts of interest with their corresponding definition or description.
Premises:
When banks have the power to sell nonbank products, employees may no longer give dispassionate, or unbiased, advice to customers.
The approval of cheap loans to an investor under the implicit condition that the loan proceeds are to be used to purchase securities underwritten by a securities affiliate.
To avoid being exposed to potential losses in a securities offering, a bank may place the securities in the accounts of customers in the trust department or other areas over which it has discretionary investment powers.
The use of inside information about customers or rivals that can be useful in setting securities prices or distributing securities offerings.
Using lending power to coerce a customer to purchase or use the products sold by an affiliate.
When a bank suggests the issuance of capital market debt for the purpose of reducing bank loans under conditions of deteriorating or questionable firm financial health.
Responses:
Salesperson's stake
Stuffing fiduciary accounts
Tie-ins
Third-party loans
Information transfer
Bankruptcy risk transference
Correct Answer:
Premises:
Responses:
When banks have the power to sell nonbank products, employees may no longer give dispassionate, or unbiased, advice to customers.
The approval of cheap loans to an investor under the implicit condition that the loan proceeds are to be used to purchase securities underwritten by a securities affiliate.
To avoid being exposed to potential losses in a securities offering, a bank may place the securities in the accounts of customers in the trust department or other areas over which it has discretionary investment powers.
The use of inside information about customers or rivals that can be useful in setting securities prices or distributing securities offerings.
Using lending power to coerce a customer to purchase or use the products sold by an affiliate.
When a bank suggests the issuance of capital market debt for the purpose of reducing bank loans under conditions of deteriorating or questionable firm financial health.
Premises:
When banks have the power to sell nonbank products, employees may no longer give dispassionate, or unbiased, advice to customers.
The approval of cheap loans to an investor under the implicit condition that the loan proceeds are to be used to purchase securities underwritten by a securities affiliate.
To avoid being exposed to potential losses in a securities offering, a bank may place the securities in the accounts of customers in the trust department or other areas over which it has discretionary investment powers.
The use of inside information about customers or rivals that can be useful in setting securities prices or distributing securities offerings.
Using lending power to coerce a customer to purchase or use the products sold by an affiliate.
When a bank suggests the issuance of capital market debt for the purpose of reducing bank loans under conditions of deteriorating or questionable firm financial health.
Responses:
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