Book 7 practice exam1 Morning session : Ethics no 4 do you agree with the answer given? How come the senior manager of the IPO department approached the portfolio manager of the fund? Is this allowed under the standards?
Please put the question if possible!!! I guess he should not as best way to avoid this kind of scenario is to create firewall between investment banking division and investment magament division of the company.
Do you have the schweser book 7? It is quite a long question to type.
I do but not here at work.
no problem if you would like to have a look at it at your own time it wuld be appreciated. Thanks
a few i came across… i think there was a question where it was o.k. to take a payoff from a company (stock promoter too???) to sell their stock in the secondary market, as long as you informed and got permission from your firm. can’t remember if you needed to disclose to client or even firm’s permission, but i know you needed to disclose to your employer… but i was shocked by that under any circumstances. payoffs for trades from companies i think is a HUGE no-no. also, schweser or cfa considered mayor of a small town as a minor part-time job that doesn’t need disclosure to employer. LOL also, anyone know vignette where the guy finds out that a company will be buying a huge tract of land in a resort area, then does his own due dilligence to piece it together and they claim that’s mosaic method using non-material non-public info… i was thinking if bill gates tells you we’re buying a major software company tomorrow then you see him with CEO of XYZ software that his telling you original info is material non-public info. same with resort land purchase in my mind (obviously bill gates is an extreme case) any thoughts???
totally agree with your points westbruin - the inside info on land purchase being part of mosaic theory really got me…the ambiguities of their questioning and sometimes inconsistency/outright lapses in ethics is baffling. maybe we should start a list of the most obscure ethical topics in the CFA…
How was the question worded regarding the land purchase? How did he find out about it? As the secret sauce says, “don’t spend your time creating unlikely scenarios where another choice might just be possible in some extremely unusual circumstance”. I think that applies to the Bill Gates part above.
SanFranMatt Wrote: ------------------------------------------------------- > How was the question worded regarding the land > purchase? How did he find out about it? > > As the secret sauce says, “don’t spend your time > creating unlikely scenarios where another choice > might just be possible in some extremely unusual > circumstance”. I think that applies to the Bill > Gates part above. me adding the bill gates part was stupid. too extreme an example. but i think someone telling you they’re buying a huge shopping mall in some area where there’s one huge shopping mall (or even 2 or 3) is material public info… i may put down the exact wording but then it would tie into all his “mosaic” work. the other ethics question i wondered about was the guy looking at the semiconductor company and he phones the french p.r. woman and she tells him some interesting info. wasn’t sure if this was non-public info (wasn’t clear whereas land purchase was clear that it was non-public). if it was public info, presumably he didn’t need to phone her. again, if it was non-public, i’d say it was material as well… my thought was that non-material non-public info was someone who works at starbucks telling you that some new soft drink they sell is selling like crazy and then you look into it and find out it’s XYZ soda, traded for pennies on a junior exchange.