Quote from the Standards of Practice handbook …“if the issue is oversubscribed, members and candidates should forgo any sales to themselves or their immediate families to free up additional shares for clients.” Hence the guy was right in not allocating the oversubscribed IPO shares to his wife’s account. Phew, +1 for me! (See Page 75, http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2005.n3.4000?cookieSet=1)
Yes!!
Not unless wife is a client, which she was in this case.
^^^ where does it say that, this one is pretty easy a wifes acct is beneficial to the advisor and thus they should not get ipo shares. please tell me how a wifes acct is not beneficial…?
It’s not beneficial if she’s sleeping with the pool boy. In this case, the wife’s account is beneficial.
I recall that the automatic-beneficial rule is “a family member living in the same residence with you.” So separated spouses aren’t beneficial, but living-together spouses are.
^^ ok that may make sense but still only if they are seperated, if they are still married and not divorced it has to be beneficial, i.e. maybe they live in different residence since he has to work in london for 6 monthts, I dont think you can just go by that rule, depends on the case and it could be true. But in this case it said nothing to this extent.
I agree, I don’t remember any fact pattern suggesting that they lived together or were separated. I suppose that it’s reasonable to assume that married people live together unless told otherwise, but this is CFAstan (SEE-fa-stan), where the moon can be made of green cheese, as long as it appears in a reading footnote, so who really knows.
Didn’t something like this show up in a CFAI Sample Exam? I remember saying that the manager was a beneficial owner of the spouse’s account and got the question wrong according to CFAI.
wife’s account is practically the same as his account according to the CFAI. anyway didn’t the quesiton say her account was nonfee paying? (or was that another question)
non fee paying but discretioary
The question did say she was non fee paying. I think I did a schweser one like this. He can allocate to the wife. Provided her allocation is on the same basis as everyone else. Otherwise, you would unfairly be discriminating against a client, just because of the relationship.
crazy thing is we will never know as they will not release this question!
Scruffy Wrote: ------------------------------------------------------- > The question did say she was non fee paying. > > I think I did a schweser one like this. He can > allocate to the wife. > > Provided her allocation is on the same basis as > everyone else. > Otherwise, you would unfairly be discriminating > against a client, just because of the > relationship. that would be true if it was a regular client that was non fee paying. not his wife where it is assumed he has beneficial ownership.
It was his wife’s non fee-paying discretionary account. Since it is non fee-paying, it is not treated like a normal account in that situation, and you cannot allocate an oversubscribed IPO to her. If she paid fees, yes. Think about it, it is basically his account. This one was easy.
wife is a client, her account is discretionary, therefore should be treated the same as other discretionary client account
Sai Wrote: ------------------------------------------------------- > wife is a client, her account is discretionary, > therefore should be treated the same as other > discretionary client account since he has a beneficial ownership and he is the one with the discretion. isn’t that therefore like him allocating shares to his OWN account.
^^why is everyone having a problem with this question, it was a beneficial acct and what he did was fine, does not matter if it is discretionary or non, end of story,
I agree. The rest of you who thought it was not beneficial got it wrong. Live with it.
I think whether it was discretionary or not is irrelevant. As her husband, he owns 50% of those assets by law, whether his name is on the account or not. Putting IPO shares into his wife’s account sounds way out of bounds.