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RSE practice questions: ethics and conduct
Ten RSE practice questions on ethics. CIRO IDPC Rule 1400 sets the standards of conduct, and Rules 3110 to 3114 cover conflicts of interest. NI 31-103 §13.4 covers a firm's conflicts of interest, and IDPC Rule 3115 restricts personal financial dealings with clients. Most retail ethics fails are about timing of disclosure, not the existence of disclosure.
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FAQ
What's an outside business activity?
Any activity a registrant performs outside the dealer that could reasonably be expected to give rise to a conflict, hold them out as part of another business, or generate income. It must be disclosed in writing to the dealer, and to the client where applicable.
Can I borrow money from a client?
No. Personal financial dealing under CIRO IDPC Rule 3115 prohibits borrowing, lending, gifts beyond firm policy, and joint investment with clients (with limited exceptions for family members under firm review).
What's the gatekeeper obligation?
Registrants are expected to identify and report suspicious activity (AML, fraud, manipulation) to the dealer and to FINTRAC where reportable. Failure to escalate is a regulatory breach, not just a moral one.
Difference between suitability and fiduciary duty?
Suitability (CIRO Rule 3402) is the regulatory floor: the recommendation must be suitable given KYC. Fiduciary duty (common law) applies in specific relationships such as managed accounts and trustee roles. Confusing these two is a frequent wrong answer.
What's the conflict-of-interest disclosure timing rule?
Material conflicts must be disclosed in writing to clients before the conflict crystallizes (i.e., before the trade or recommendation). Generic boilerplate at account opening is insufficient when a specific conflict applies.