Ethics issue: Failure to maintain knowledge of the law

ON July 15, the Singapore court convicted a woman for managing funds without a licence. In a media release on enforcement actions published on Monetary Authority of Singapore website, the woman pleaded guilty to the charge under section 82 of the Securities and Futures Act (SFA) for managing her clients’ portfolio without a capital markets services licence. In providing the fund managing service, the woman agreed to an equal share of profits generated from trades, but with losses borne by her clients.

Section 82(1) of the SFA indicates that no person shall carry on a fund management business without a capital markets services licence issued by the MAS. Doing so is a clear violation of the law, an area finance professionals should know before rendering services to investors. Finance professionals should also possess knowledge of the law and keep abreast of changes to the law.

The Knowledge of the Law Standard

CFA Institute, a global professional body for investment management professionals, provides guidance on understanding applicable laws and regulations of the countries and jurisdictions where they engage in professional activities. These activities may include, but are not limited to, trading of securities or other financial instruments, providing investment advice, conducting research, or performing other investment services.