14. One of the discretionary accounts managed by Farnsworth is the Jones
Corporation employee profit-sharing plan. Jones, the company president,
recently asked Farnsworth to vote the shares in the profit-sharing plan in
favor of the company-nominated slate of directors and against the directors
sponsored by a dissident stockholder group. Farnsworth does not want to
lose this account because he directs all the account’s trades to a brokerage
firm that provides Farnsworth with useful information about tax-free investments.
Although this information is not of value in managing the Jones
Corporation account, it does help in managing several other accounts. The
brokerage firm providing this information also offers the lowest commissions
for trades and best execution. Farnsworth investigates the director issue,
concludes that management’s slate is better for the long-run performance of
the firm than the dissident group’s slate, and votes accordingly. Farnsworth:
a. Violated the Standards in voting the shares in the manner requested by
Jones but not in directing trades to the brokerage firm.
b. Did not violate the Standards in voting the shares in the manner requested
by Jones or in directing trades to the brokerage firm.
c. Violated the Standards in directing trades to the brokerage firm but not
in voting the shares as requested by Jones.
d. Violated the Standards in voting the shares in the manner requested by
Jones and in directing trades to the brokerage firm.
The correct answer is b. This question Standard III(A)–Loyalty, Prudence,
and Care, specifically, a member or candidate’s responsibility for voting
proxies and the use of client brokerage. According to the facts stated in the
question, Farnsworth did not violate Standard III(A). Although the company
president asked Farnsworth to vote the shares of the Jones Corporation
profit-sharing plan a certain way, Farnsworth investigated the issue and
concluded, independently, the best way to vote. Therefore, even though his
decision coincided with the wishes of the company president, Farnsworth
is not in violation of his fiduciary responsibility to his clients. In this case,
the participants and the beneficiaries of the profit-sharing plan are the
clients, not the company’s management. Had Farnsworth not investigated
the issue or had he yielded to the president’s wishes and voted for a slate of
directors that he had determined was not in the best interest of the company,
Farnsworth would have violated his fiduciary responsibility to the beneficiaries
of the plan. In addition, because the brokerage firm provides the
lowest commissions and best execution for securities transactions, Farnsworth
has met his fiduciary duties to the client in using this brokerage firm.
It does not matter that the brokerage firm also provides research information
that is not useful for the account generating the commission, because
Farnsworth is not paying extra money of the client’s for that information.
请问各位这个low fee alternative不是没有用于客户本身的账户用在了其他账户上，这不是与standard
相违背的？为什么说not violate 呢？
“Farnsworth does not want to
lose this account because he directs all the account’s trades to a brokerage
firm that provides Farnsworth with useful information about tax-free investments.
Although this information is not of value in managing the Jones
Corporation account, it does help in managing several other accounts.”
