You get best execution for client but in return you get soft dollars which helps you run the firm. violation yes/no?
yes
yes, soft dollars are only for the benefit of the client!
100% violation.
ws Wrote: ------------------------------------------------------- > 100% violation. but you get best execution. Then i dont really understand this phrase in code of ethics “Whenever a manager uses client brokerage to purchase goods or services that do not benefit the client, the manager should disclose to clients the method or policies followed by the manager in addressing the potential conflict. A manager who pays a higher commission than he or she would normally pay to purchase goods or services, without corresponding benefit to the client, violates the duty of loyalty to the client”
It’s only a violation if you don’t use the clients’ soft-dollars in their interest.
I’m don’t think this is a violation if you’re still getting best execution. See for example #14 in the Standard of Practice ‘exam’ (in the handbook) - here the soft dollars are clearly not for the benefit of the client. As for using them ofr running the firm though…I’m not 100% sure
Damosin is right “In addition, because the brokerage firm provides the lowest commissions and best execution for securities transactions, Farnsworth has met his fiduciary duties to the client in using this brokerage firm. It does not matter that the brokerage firm also provides research information that is not useful for the account generating the commission, because Farnsworth is not paying extra money of the client’s for that information.” That is what i thought here folks,i just saved you 3 pts!
BTW, worth doing the Standard of Practice exam if you’re looking for something easy to do in the final hours. It reconfirms some of the basics.
I still think it is a violation. Farnsworth could then give back the soft dollars to its client in another way (a different service).
MrDonadei but the answer clearly states it is not
Just another impossibility of ethics.
Where can we find the Standards of practice exam ?
i think that is clearly ok. there is nothing wrong with soft dollars as long as they go towards the investment research process. if you have to chose between best execution w soft $ and best execution w/o soft dollars you take with. it’s the best of both worlds for the client. am i missing something?
I still think that in this case soft dollars are some kind of “gift”… And since it would be easy for Farnsworth to give it back to the client under another form, I think that would be the most ethical solution 
I agree but I think the quesion will be phrased ‘is this a violation?’