Ethics - few questions

  1. Do you have to notify your employer, current clients, and prospective clients if you have another or source of income? Do they have to approve? If so, in writing?

  2. Allocation of IPOs - Can someone give an examples of how one might allocate to clients in a fair/equitable manner? What about allocating within the your firm to PMs and staff if it is not an oversubscribed IPO?

  3. Lets say you misallocated a trade among accounts and want to correct it. The stock subsequently goes up and there is a gain in the account you mistakenly put it in. What happens now?




Trading errors alway benefit the client. Made them extra money…they keep it otherwise you’d profit off of your mistake with your client’s money. Accidentally lost them money…you make them whole. Maybe it’s out of scope for the exam, but pretty much every firm in existence has E&O insurance to cover trading errors.

I saw this one question where a guy coached soccer on the weekends or something and got paid for it, and to my surprise he was supposed to declare it to his employer. Anyone know why this might be? It would “reasonably interfere” with his real job?