"morality" exercise:GIPS compliant

B is correct because Standard VI(B)–requires client transactions to be given precedence over transactions made on behalf of the member’s or candidate’s firm or personal transactions. Because the advisor trades alongside his clients and allocates trades on a rotating basis, there are times when the advisor’s trades will receive priority over his clients in violation of the Code and Standards. A member or candidate having the same investment positions or being co-invested with clients does not always create a conflict. Some clients in certain investment situations require members or candidates to have aligned interests. Personal investment positions or transactions of members or candidates or their firms should never, however, adversely affect client investments. 

A is incorrect because the trade allocation procedure does not meet the requirements of Standard VI(B), which requires client transactions to be given precedence over transactions made on behalf of the member's or candidate's firm or personal transactions. 

C is incorrect because even though trade allocation procedures should be disclosed to clients, in this case the procedure fails to meet the requirement of the Code and Standards, so disclosure is not sufficient and the procedures should be revised.

C is correct because compliance with the GIPS standards does not eliminate the need for in-depth due diligence on the part of the investor.

A is incorrect because compliance with GIPS standards may strengthen internal controls. 

 B is incorrect because compliance with GIPS standards enables a firm to participate in competitive bids against other compliant firms throughout the world.