Study Session 2: Ethical and Professional Standards: Application
Hello everyone. I’m just wondering, if the law does not allow a member or candidate to divulge client information, would it be a violation of the standard III(E) to reveal the information if CFAI PCP requests it? What’s confusing me is a statement in the curriculum that says ” If permissible by law…” Does it mean that you cannot reveal information to the CFAI PCP if its first allowed under the applicable law? Or can you reveal info to the CFAI PCP even if the law doesn’t allow it?
Example 9 of the the SchweserNotes (pg. 47)
“A member is a full-time employee of an investment management firm and wants to accept a paid position as town mayor without asking his employer’s permission. “
The answer says Since the mayor position does not conflict with his employer’s business interest, there is no violation.
I am confused here cuz I thought the guidance require a notification and employer’s consent. (pg. 43 of the SchweserNotes), can someone explain here? THANKSSSS!
Do all the standards for employees also apply for agents? Let’s say you’re on an agent agreement with the firm, and you develop a model to analyze what stocks to pitch to your clients, is that model property of the company? Also, is your client list the company property?
Let’s say you doing research into a company (combination of interviews with employees and research from public info). The interviews have generated non-material, non-public info, and your cumulative research points to a strong buy.
Nothing wrong here, but let’s say as you walk out, the CEO gives you a piece of material non-public info…
Can you still buy their stock?
if management of a public company places large amount of sell orders one second after a material non public information is published by media (e.g. company is going downhill), is that a violation?
Can I get a thumb-up/down for these four in relation to quiet periods?
1) Prior to reports being issued
1a) quiet period is 5 days AFTER (R.O.S)
2) Prior to an IPO
2a) 30 days prior, and 10 days after
3) Prior to a new recommendation
3a) 30 days prior, and 5 days after
4) Secondary offering
4a) 10 days prior/after
1.Is significant information about earnings guidance given out during analyst conference calls material “non-public” information.
If that is so, then aren’t CFA charterholders going to be at a distinct disadvantage in the marketplace, since all the other analysts are likely to trade based on the information they receive on the call, but the CFA charterholders can’t because of their Code of Ethics?
And, if it is considered material non-public information, why do the regulators allow it?
A and B are both clients of my firm, under the same investment strategy
If I charge Mr. A a management fee of 2% and 20% of profits.
I charge Mr. B a management fee of 2% and 20% of profits in excess of the S&P 500 return,
it can clearly be seen that the two fee structures are different.
Am I in violation of the Code of Ethics / Standards?
I’m trying to find the difference between these two examples but I don’t see one. Can someone please explain the difference in the example used in quesiton 6 below. The questions are regarding Standard VI(B) Priority of Transactions.
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