In relation to VI(B) Priority of Transactions, what does the beneficial ownership exactly mean? Is spouse or childer hanving shares of a company on which member is giving a recommendation, constitute beneficial ownership?
The idea is if the member has beneficial ownership of, or interest in the shares, this must be disclosed and these transactions must be conducted after clients and employer. Correct me if I’m wrong. Beneficial ownership = any situation where you directly benefit from a stock/bond/whatever increasing in value.
Got my answer while doing qbank. spouse shares are to be disclosed. Will Lambert, CFA, is a financial analyst for Offshore Investments. He is preparing a purchase recommendation on Burch Corporation. According to CFA Institute Standards of Professional Conduct, which of the following statements about disclosure of conflicts is most correct? Lambert would have to disclose that: A) he has a material beneficial ownership of Burch Corporation through a family trust. B) both of these choices require disclosure. C) his wife owns 2,000 shares of Burch Corporation. Your answer: A was incorrect. The correct answer was B) both of these choices require disclosure. Standard VI(A) requires that Members and Candidates fully disclose all matters which may impair their independence or objectivity or interfere with their duties to their employer, clients and prospects.
The phrase is also often used when a brokerage purchases shares for a client. The shares are nominally owned by the brokerage through whatever that financial clearing house thing was called. But beneficial ownership lays with the client.