Ethic Q

X is a portfolio manager. In purchasing bonds for the account of the pension fund of Y, no commissions were paid but there was a spread charged by the broker between the purchase and sale price of the bonds. The brokerage on the trade is not governed by any securities regulation. The specific brokerage from the trade: A) cannot be used to benefit any other client. B) can be used to benefit another client as long as X receives prior consent from Y. C) can be used to benefit another client as long as X receives consent from Yeither before or after the trade. D) can be used to benefit another client as long as Ybenefits from other the client’s brokerage in the future.

B? Principal trade. Must be disclosed to the client that this is the firms stance before when signing up.

b…god knows?

i’d go with b as well. then go apesh*t.

Turn over some tables!


Care to explain?


Is ethics really this bad or do people just post the worst questions?

mwvt9 Wrote: ------------------------------------------------------- > Care to explain? i don’t know if this post was meant for me…hahah anyway…on a serious note… I don’t remember much about principal trade rules… but I like to go with B …

judging so far by the cfa online test and schweser book 6, i think it really is going to be pretty bad. i felt like at level 1, ethics was a layup. think it will be different in level 2.

B. Principal trade can be used for other clients with disclosure and consent. Can not be used there are some regulation to prevent this.

D. I believe that soft dollars can be used to the benefit of other clients as long a Y will also benefit from the $ eventually.

WTF, I don’t know what to chose when there’s no apesh!t option! b?


B. This week I set aside three days to read ethics (again) so it is fresh prior to mock hell. I have to say it is making me nervous. There is a lot to test from. I would not expect to see the slam dunk: soandso put CFA-Grand-Master on his business card, violation? Prudence - old v. new, Fiduciary Standards, Soft Dollars, Trade Allocation, Research Objectivity Standards – those required / recommended distinctions will break me. derivs and pm need work but I have to take some time here.

And the answer is B.

why is it B… is this not a pension fund and there is no information on whether pension is subject to ERISA

my worst nightmare is that we’ll be faced with the first ethics item set with all 6 questions of the double trouble variety: Recommended by Obj Standards vs Required by Obj Standards. Yes Yes Yes No No No Roll over and die commit harakiri