A port manager oversees two portfolios. One has long positions in ABC and the other one has short positions due to the different strategies used. An analyst has just told the portfolio manager that he is going to upgrade on ABC. What can the port manager and analyst do in order not to violate fair dealing?
well I think the analyst shouldn’t have told the manager either way but the manager should do nothing
If its public information, he can do whatever he wants.
can an analyst not communicate with port manager? how else is port manager suppose to get his research from? I thought the firewal rule was more for IB side and research.
as long as the portfolio manager does the the due diligence and finds ABC to warrant a buy/increase, he can do what he wants right?
hate to see this post to be buried in the massive threads. I suppose the analyst should not have told the port manager anything about the potential upgrade. and I do not see there is anything to do with fair dealing. suppose there indeed is an upgrade, the port manager should rebalance his 2 portfolios based on the new information? The point is to evaluate stock in the context of portfolios? over05, can you post the answer or at least the choices??
- analyst should not have told the portfolio manager… 2. the portfolio manager should do NOTHING until the recommendation goes public - after that he can do whatever the hell he likes…
Manager should do nothing if the short and the long are both within the strategic plan stated by the IPS. He cannot act on this information until it is public anyways. With regards to fair dealings, I guess the manager might notify his clients of the upgrade once it is public info. If he is going to do that then he must notify both clients in a fair manner, meaning telling them both within a reasonable time frame of each other. my 2 cents
- An analyst must make the upgrade announce ASAP 2. Portfolio Manager (with the only information given) can do nothing with ABC and wait for analyst upgrade goes public This is my logic, but in Ethics questions it usually doesn’t work… Dude, we are eager for the right answer !