Ethics Mock PM

How can both of these be correct? Aren’t they contradicting each other? According to Standard III (A) (Loyalty, Prudence, and Care) voting proxies is an integral part of the management of investments and a fiduciary who fails to vote proxies may violate the Standard. The Standards of Practice Handbook also states that a cost-benefit analysis may show that voting all proxies may not benefit the client, so voting proxies may not be necessary in all instances. Members and candidates should disclose to clients their proxy-voting policies.

I know where you’re going with this, but the bottom line is… important issues need to be voted, while other trivial and administrative issues may not be worth the time and cost of investigation. Bottom line, proxies are property of the client, investment advisors/managers should evaluate, and if it’s a non-trivial issue… vote Otherwise, don’t… but always disclose your proxy-voting policies.

I don’t see any conflicting statements here. If it is cost beneficial to vote proxies, then you should always vote. If you can justify it isn’t cost beneficial, then don’t vote. Either way, disclosure your procedures to your clients.

I actually got excited that I caught the word-play during the mock exam, even though it threw me for a loop at first read. The key word is “may” Not voting proxies MAY be a violation.

MAY is the key. +1