Beneficial Ownership-going crazy

CFA Level II Ethics
#1

I’m totally lost in the beneficial ownership section, I will summarize what I have understood and would love to have your feedback, I have also included the standard below for whomever want to read it:

  1. These accounts should be executed after clients, in case of having:

  2. candidate’s own account,

  3. for family (including spouse, children, and other immediate family members) accounts,

  4. accounts in which the member or candidate has a direct or indirect pecuniary interest, such as a trust or retirement

2.These accounts should be treated equally in case these accounts (family, trust, candidate’s accounts) are client accounts

This is what I have understood from the standard, but what I do not get is the differentiation, are not the accounts in all cases considered client accounts, if not what are the categories of accounts an analyst can have?

Impact on All Accounts with Beneficial Ownership

Members or candidates may undertake transactions in accounts for which they are a beneficial owner only after their clients and employers have had adequate opportunity to act on a recommendation. Personal transactions include those made for the member’s or candidate’s own account, for family (including spouse, children, and other immediate family members) accounts, and for accounts in which the member or candidate has a direct or indirect pecuniary interest, such as a trust or retirement account. Family accounts that are client accounts should be treated like any other firm account and should neither be given special treatment nor be disadvantaged because of the family relationship. If a member or candidate has a beneficial ownership in the account, however, the member or candidate may be subject to preclearance or reporting requirements of the employer or applicable law.

#2

Can someone differentiate between the two?

#3

What’s your question?

an account u own, you wife, your children , are all considered the same. You can’t frontrun.

At my employer, all trades in my household must go through an approved brokerage firm and our corporate receives duplicate trade confirmations. This allows them to monitor my activities. If I’m running discretionary trading fir clients, I’m restricted on the securities I can trade based on a wait period.

#4

I don’t get this sentence

" If I’m running discretionary trading fir clients, I’m restricted on the securities I can trade based on a wait period."

The wait list is applied on all transactions, including those for my clients.

I also do not get why I can’t trade for my family’s accounts at the same time with my clients, are not they considered clients? or is there another category they are categorized in which make me, as an analyst, trade for them later.

#5

You, your wife, your children are VERY different than your crazy uncle Ronnie who happens to be a fee paying client as well. That’s the difference.

#6

It means, when I am trading on a discrepancy platform for my clients (I can buy apple stock for my clients if I wish, or sell tesla stock if I wish), the firm wants to make sure I’m not doing that to gain an advantage for my personal accounts. So I have a waiting period. That’s just one rule my firm has… But in CFA, I think you might be able to trade only after the client trades are complete.

There are rules imposed on research, rules imposed on various other things.

Now my Uncle vinny right be an actual client… well he gets all the benefits that all clients get, regardless of his relationship to me. HE IS A PAYING CLIENT!!! Money talks :slight_smile: