Mock PM ethics #6 only, additional, execution, receive, accounts

hariRaj

*spoiler
The answer says that Galaxy (the hedge fund) should trade client accounts through RLB (brokerage) only if the accounts receive best price and execution.
but what about softdollars??
The brokerage offers additional unique informational services that would be beneficial to clients. Should it be considered in conjunction with best price and execution?

rohitdoshi

I think if the brokerage provides best price and execution anyway, soft dollars doesn’t really matter. i.e. you are getting the lowest price or best execution PLUS you get whatever is included in soft dollars

Unforseen

I’m not clear on this, I thought they don’t HAVE to get the best price and execution?

tikfed

Best price and execution INCLUDE soft dollar benefits
The issue with the section is that the broker is requiring clients sign a statement saying that they agree to an arrangement where they may not get the best price and execution. Clear violation.
Other options also don’t make sense. Referals are permitted if they are disclosed to clients before any agreement is signed. Average quality execution is just a random red herring.

Iginla2010

It’s really more about entering into the exclusivity agreement that bars seeking better execution elsewhere.