Can someone help me understand this? Carl Johnson, a large equity client of Madison Investment Advisors, directs Madison to pass along old copies of any research purchased with soft dollars generated by trades in his account to his friend Jacob Wisnewski. Madison receives about ten such reports per year, and, after these have been reviewed in the context of their relevance to Johnson’s account, they are forwarded on to Wisnewski. With regard to this procedure, which of the following statements is TRUE? The research: A) does provide a benefit to Johnson but may not be released to Wisnewski with or without the permission of the source. B) does not provide a benefit to Johnson but may be released to Wisnewski with the permission of the source. C) provides a benefit to Johnson and may be released to Wisnewski with the permission of the source. ANSWER IS BELOW . . . . . . . . . . . . . Your answer: A was incorrect. The correct answer was C) provides a benefit to Johnson and may be released to Wisnewski with the permission of the source. Since the research received is relevant to and is used for the benefit of Johnson, there is nothing inherently wrong with passing the reports to Wisnewski unless precluded from doing so by the provider of the research.
you’re getting research bought for you with soft dollars. all that’s happening here is after you’ve used the research, you’re just giving it to your buddy to look at. unless there’s some crazy copyright/privacy whatever on that research, it’s like anything else. you buy it, you can do with it whatever you want. he passes the old research onto his buddy, no big deal. says specifically that the original research bought w/ soft dollars was bought for the benefit of you as the client (so not answer B). as long as that research provider says that the research can be passed along, it’s fine.
I see. Thanks Banni. The way I interpreted this was that since we live in a capitalist society and there is no free lunch, it struck me as odd to have someone “free-ride” on someone else’s brokerage. Based on your explanation, it’s OK to pass research on to someone else (provided there are no copyright issues) in spite of not having a clue of the free-riders investment objectives. So to summarize, if I’m on the sales desk and my client tells me to send research that was used on his account to his buddy, I listen and do what my client tells me to do. Feel free to pitch in if there further comments.
i’d think in general you’d rather not forward it along, but unless there’s something on the literature saying you can’t re-distribute it or some kind of copyright, etc, then yes… it’d be ok to pass it along. i doubt we’ll see a q like that on the test but you never know. seems a bit obscure.
you purchased that reports through his money and he can do whatever he wants to do with those reports