Dslyexic is correct. It does not matter what the committee says as far as not wanting best execution. Even though they are representing the plan participants, the ultimate duty of a cfa is to a plan participant not the committee. Remember the ERISA rules. So the CFA must act in the interest of the beneficiaries or plan participants. It does not matter if the board agrees or not. If the CFA acts on these instructions he/she is not seeking best execution. This is the basis of a ton of fee litigation currently in the courts where participants are suing companies over excess fees.
Now the self directed brokerage is a good point and I dont remember the specifics in this question if this is just brokerage or actually self directed brokerage. I dont think this is self directed brokerage as the CFA is executing orders based on the order of the plan so self directed brokerage does not matter. But I think this is getting pretty far into the weeds and over thinking the question.
phew… I guess we will never know since we dont get these answered.
> It’s not ok because, you need to get WRITTEN
> consent in order for this to be ok. The guy in
> this question was just aware that they were aware
> about it.
You don’t need written consent for conflicts of interest. Although I still think I got this wrong..(said it was fine)
i thought this was a violation for not getting best execution, investment committee is enjoying the perks of this broker so of course they will be ok with directing trades through them regardless of execution, plus it said earlier that the PM had to school the committee on how the investments should work, so i am thinking they are not savvy enough to comprehend that it is wrong not to provide best execution,
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