What is required from fund managers under the Advisers Act concerning their code of ethics?

• A. It must be verbal and enforceable
• B. It must be established in writing and enforced
• C. It should be optional based on firm preference
• D. It can be communicated informally to staff

Answer: (B)

Under the Advisers Act, fund managers are required to have a code of ethics that is established in writing and enforced. This requirement is implemented to promote ethical behavior and compliance with applicable laws and regulations within the firm.

Having a written code of ethics ensures that all employees are aware of the standards and expectations regarding their behavior, which fosters a culture of integrity and accountability. This written policy not only outlines the ethical obligations of the fund managers and their employees but also serves as an operational guide for decision-making processes. Furthermore, the enforcement aspect is critical as it signifies that the firm takes adherence to the code seriously and will address any violations in a structured manner.

By making the code of ethics a formal document and enforcing it, fund managers help to protect the interests of their clients and maintain trust in the financial markets. This approach reinforces the importance of ethical considerations in financial advisory practices, which is pivotal for the stability and reputation of the investment industry.