Post any Ethics "gray" stuff here travel, following, practice, employee

jim8z3

I will start by 2 points
1) It is mentioned that as “best practice”, analysts should not accept travel arrangements made by external managers. In the even that they do accept it, are they violating Standard 1B “Professionalism” or are they merely not following best practice?
2) If an employee does trade in a stock for personal benefit during a prohibited period, but subsequently incurs a loss; does the employer punish the employee AND reverse the trade, or does he just punish him and not reverse the trade because the employee didnt gain anything ?

redskins44

in terms of IV(A), at which stage do you have to notify your employer that you are leaving?

RoastBeef

I got a couple of these…
1) Mr X is an analyst who has produced a very negative research report on Company ABC, which is reporting Q4 earnings tomorrow. His clients hold short positions on Company ABC. His research is thoroughly supported and has a diligent and reasonable basis. He times the release of his report in the last minutes of the trading day to sensationalize the negative impact on company ABC such that company ABC does not have enough time to refute the report’s conclusions. Thus, Company ABC drops substantially in after-hours trading. The next day, he covers the short positions for his clients at a large profit. Is this a violation of Market Manipulation even though he has a reasonable basis and acted in the best interests of his clients?
2) Mr X works at Company ABC. He is trained by Mr Y, who teaches him about a Quant model he developed with a unique trading strategy embedded in the model which he devised personally. Mr X then leaves Company ABC and takes nothing with him. He re-creates the Quant model from memory and creates all the supporting documentation. He does not cite Company ABC or Mr Y when presenting the model to management at his new firm. Is he in violation?
3) Mr X is planning to leave Company ABC. He decides to incorporate his new firm, which will directly compete with Company ABC. However, he ensures it does not interfere with his work and does not use any materials from Company ABC in setting up his new business. Mr X then leaves Company ABC abruptly, and Company ABC is upset because they were not even given a chance to counter-offer - Mr X decided to leave, did not disclose his intentions, and established his company while still employed. Is he in violation (specifically - does Mr X need to disclose that he was leaving Company ABC before doing anything else?)

Windjam

tiredofstudying:
1. i think the issue would be the timing of the report to cause maximum damage. wouldnt research objectivity require you to disclose that you have clients in those short positions? it would be tantamount to market manipulation. its for that reason that you are supposed to have a firewall between your research and IB
2. yes. intellectual capital has nothing to do with physical removal of documentation. plagiarism = misrepresentation
3. similar question to mine.

SkipE99

What is the limit to record retention? I remember a question/answer that implied that you have to save literally every piece of source material you ever use in a research report. Obviously research you gather yourself (like interviews) makes sense, but what about the other stuff?

troymo

1. Yes. (I see the intent)
2. No. (training is a settled matter would not carry plagarism)
3. Curious. (setting up a company while still working - no problem absolutely. However, not giving enough notice may be a sticky item. I cannot see any obligation violated in not waiting for a counter-offer. I want to say ‘NO’)