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

aidebaobao

Members or candidates may undertake transactions in accounts for which they are a beneficial owner only after their clients and employers have had adequate opportunity to act on a recommendation. Personal transactions include those made for the member’s or candidate’s own account, for family (including spouse, children, and other immediate family members) accounts, and for accounts in which the member or candidate has a direct or indirect pecuniary interest, such as a trust or retirement account. Family accounts that are client accounts should be treated like any other firm account and should neither be given special treatment nor be disadvantaged because of the family relationship. If a member or candidate has a beneficial ownership in the account, however, the member or candidate may be subject to preclearance or reporting require- ments of the employer or applicable law.
(Level III Volume 1 Ethical and Professional Standards , 4th Edition. Pearson Learning Solutions 132).
<vbk:9780558654832#page(132)>

NO EXCUSES

Chuckrox

You can 100% absolutely have pro bono accounts. In any event if you have a beneficial interest in an account, even if it's your brothers, aunts, friends, neighbors, inbred stepchild, you have to let your firm and other clients come first (even if the inbred step child pays fees).

NakedPuts00

easy there my fellow analist

yes a client can be both fee and non fee paying

non fee paying makes it a bit more tricky actually since the standards says explicitly ( from memory so someone please feel free) that all fee paying clients are to be treated the same..............

former

I chose A

I think the distinction here is the fact that it says in the question: "Rock’s wife has an account at Best Trade Co" indicating that she is a client, fee paying or not.

A beneficial owner only needs to wait if they are trading in a personal account - meaning not as a client of the particular research. only then would Rock need to wait.

Since the wife is a client, again fee paying or not, she is allowed to be privy to the research and therefore can trade immediately.

Continuation of BPdulog's std 6B quote:
...Family accounts that are client accounts should be traeted like any other firm account and should neither be given special treatment nor be disadvantaged because of family relationships.

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.

bkballa

so his wife isnt a cliient?

justin88

gotcha CP. that was my fault.