I just finished reading the Standard VI B for Priority of Transactions. In there I am a bit confused. On Page, 95 of CFAI text it says (basically) that immediate family members including spouse, children should come after the clients, firms trades. They shouldn’t be benefited due to our position. Then it says that Family members that are “Clients” should be treated like other clients. Meaning their accounts can be traded like clients. It also says that if we are a beneficial owner in any of these “Family Client” accounts, we may be subject to pre-clearance or reporting requirements. My understanding is this: If my son(don’t have one) has an account with my XYZ Firm…he is a client. So, his accounts MUST be not discriminated against. If I am on the account as a beneficiary, then I just have to get pre-clearance. Is that right? That doesn’t make much sense to me. What is the criteria to be used to determine if my immediate family member is a client or not? Them paying fees? This one is a mess. Please help in clarifying. Thanx
Don’t discriminate against or give special treatment to and get pre-clearance and/or report to employer and/or any regulator body, if required. And it should be fairly easy to determine if they are a client or not.
I wish I had the books here to go over it with you, but my understanding over HERE (in canada) is that any family member living in the same household shall be labelled as a ‘pro’ account. Here’s an excerpt from the ethics course i completed (the course is a requirement to be licensed in Canada). "Pro Accounts It is a generally accepted industry practice that all employees of a member firm or a related company and any of their family members living under the same roof are considered to be non-clients or “pro’s”. It SHOULD be similar to what the CFAI curriculum is. My understanding is that the only way around this (ie: say my wife [i dont have one] doesnt want to be labelled as a ‘pro’ account) would have to be VIA some sort of written documentation signed by the both of us stating that I have absolutely no involvement whatsoever in her financial affairs.