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Ethical obligations of supervisors

Ahmed Jamal, CFA, head of research for Valley Brokers, decided it was time to change his recommendation on D&R Company from buy to sell. He orally announced his decision during the Monday staff meeting and said his written report would be finished and disseminated to Valley’s customers by the middle of next week. As a result of this announcement, Doris Smith, one of Jamal’s subordinates, immediately sold her personal shares in D&R, and Martin Temple told his largest institutional customers of the change the following day. Which Standards have most likely been violated?

The answer key claims Jamal was in violation of “Standard IV(C) Responsibilities of Supervisors” on the basis that Jamal failed to properly supervise employees and provide adequate procedures and policies to prevent employee violations.

What kind of measures is the CFAI looking for to Jamal to take? From a layperson’s standpoint, if Doris and Martin want to pull those stunts, that’s on them.

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startuppivot wrote:
What kind of measures is the CFAI looking for to Jamal to take? From a layperson’s standpoint, if Doris and Martin want to pull those stunts, that’s on them.

Two possibilities spring to mind:

  1. Not making the announcement ten days before the report is to be disseminated.  One hour before seems a bit more appropriate.
  2. Having procedures in place that prevent staff from buying or selling shares of companies on which research is being done without approval by the compliance department.

You know: easy, common-sense stuff.

Simplify the complicated side; don't complify the simplicated side.

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S2000magician wrote:

startuppivot wrote:
What kind of measures is the CFAI looking for to Jamal to take? From a layperson’s standpoint, if Doris and Martin want to pull those stunts, that’s on them.

Two possibilities spring to mind:

  1. Not making the announcement ten days before the report is to be disseminated.  One hour before seems a bit more appropriate.
  2. Having procedures in place that prevent staff from buying or selling shares of companies on which research is being done without approval by the compliance department.

You know: easy, common-sense stuff.

+1