Qbank: Conflict of interest interest, general, account, company, public

Carson

Andy Rock, CFA, is an analyst at Best Trade Co. The company is going to announce a sell recommendation on Biomed stock in one hour. Rock was a member of the team who reached the decision on Biomed. Rock’s wife has an account at Best Trade Co. that contains Biomed stock. According to the Code and Standards, trading on Rock’s wife’s account can begin:

A)
as soon as the information is disseminated to all clients.

B)
only after the recommendation is announced to the general public.

C)
only after Rock, as a beneficial owner, has given an appropriate amount of time for clients and his employer to act.


The answer is A... I tot it should be C

wake2000

A is right. while you need to let ALL clients know and the info should go public, you shouldn't disadvantage anyone (including the wifey) just b/c she's the wifey. fair and equal treatment. obama-style if you will.

zwjy

Could it be because the beneficial interest story only applies to the oversubscribed IPO issue?

canadiananalyst

I don't know the details; but your point is important, I guess. If Rock is just a buy-side analyst, and not the portfolio manager of the wife's account, it sounds OK to treat her account as a regular account.

Roflnadal

actually, i take that back. emplyer over yourself....

justin88

gotcha CP. that was my fault.

bboo

I think the primary determinant here is whether or not he has a beneficial interest in the account, but it's not really clear. We can only assume he does because they're married.

NO EXCUSES

dyga

Standard 6B:

B. Priority of Transactions. Investment transactions for clients and employ- ers must have priority over investment transactions in which a Member or Candidate is the beneficial owner.
(Level III Volume 1 Ethical and Professional Standards , 4th Edition. Pearson Learning Solutions 17).
<vbk:9780558654832#page(17)>

NO EXCUSES

mik82

cmon guys its def A

the wife is a fee paying client of the firm......she should be treated the same as other clients......................as soon as the info is disseminated to all clients then clients can begin trading

thommo77

Two things -

1.)it doesn't say fee paying anywhere.
2.)even if it did, i do believe that if you have a beneficial interest in the account, fee paying or not, clients and employer come first.