I am going through the Qbank and came across a question where you are an analyst at a firm that is getting ready to issue a sell recommendation for a stock. Your wife is a client and has the stock in her account. When are you allowed to trade on it? I said only after you have given enough time for clients and your employer to act because you are a beneficial owner of the account. The correct answer is as soon as the info is disseminated to all clients. The solution also goes on to say that family accounts should be treated like any other account (I agree) and that members may undertake transactions in accounts for which they are a beneficial owner only after their clients and employers have had a chance to do so (I agree). The solution then says personal transactions include those made for the member or candidate’s own account and for family (including spouse, children, and other immediate family members) accounts. Does this seem contradictory or am I missing some subtlety in the answers? Seems to me like you would be a beneficial owner of your wife’s account. Is being a beneficial owner different than a personal account?
Your Spouses’ account should be treated as your account.
which would mean you would have to wait to trade on the account until other clients and your employer have acted, correct?
Schweser is wrong. You are a beneficial owner and thus it should be treated as your own and not say your Uncle’s or Neighbors.
Yeah, that’s what I thought. Schweser strikes again!
Beneficial account IIRC includes any family member’s account if they live with you. I believe if you have a high probability of inheriting (so, parents, possibly grandparents, and uncles or aunts who you know are going to leave you something), it is also considered a beneficial interest.
There was an ethics case example in CFAI reading that parents account should be treated same as other clients, would’nt that apply to spouse too.
indike Wrote: ------------------------------------------------------- > There was an ethics case example in CFAI reading > that parents account should be treated same as > other clients, would’nt that apply to spouse too. That’s basically my whole point. I agree that parents account is to be treated as a client account. The spouse’s account is more nebulous. It is family but you have a direct benefit from it.
bigwilly Wrote: ------------------------------------------------------- > Your Spouses’ account should be treated as your > account. Tell it to John McCain…
Well, for CFAI test purposes, if there is a beneficial interest, there is a problem. A spouse that lives with you is definitely a beneficial interest. From there, I think the vignette needs to be specific about relatives and needs to tell you whether some relative has a beneficial interest or not. Now the real question is in real life, what is it that makes something a “beneficial interest”. I don’t have my CFAI texts with me, but maybe it’s in the glossary somewhere. After all, in real life you may have to defend yourself to a CFAI investigation about whether you provided your dad with an appropriate level of service (because he’s not), or whether you improperly benefited (because he is). Best to get yourself disinherited, I think. Makes life easier.
in real life… it is any account you have a financial interest in… as in your profitabilityis tied to that account… your mom’s account, your brother’s account? No… your wife’s, or your kid’s account? yes
my spouse’s account is my account when it’s doing well. hers when it’s not. or is it the other way around?
Max - I think that all depends on how much ‘alpha’ she’s giving you…
if the wife is a client of the firm you can’t disadvantage her by not treating her like the rest o f the clients i think the standard applies to when your wife is not the client of the firm… you can’t trade using ur account since a reasonable time has passed so you get around that restriction by trading through her ac. thats wrong if wife/mother/ bother client - trade
^No. If you have Beneficial Ownership the account must be treated like your own. If not, I could front trade all my companies trades in my “wife’s” account and taht would be “ok”.
i realise that … but i remember reading an example where excluding a family’s member account from recieving an ipo was considered a violation… it explicitly stated that you cannot discriminate any client of the firm… also you can’t randomly trade on your wife’s account like you said … the trades and their frequency have to be consitent with her ips … and ipo or ‘hot’ issues have to follow some pre-determined pro rata allotment discipline… its all wooly, i guess we decide based on the question. it might provide more facts to make a right choice.
Yes, if its your Parents or Uncles, Aunts, Brother, Sister which you have no “direct” beneficial ownership. But you wife and kids, sorry they are included in the same boat as you are… Our firm follows the Standards and trust me its really annoying at times!
There’s no beneficial interest if your spouse is sleeping with the pool boy. Then you know you ain’t gonna benefit from that when she takes you to divorce court.
Then you demand 50% from her