page 107 should clear up questions relating to referencing CFA: http://www.cfapubs.org/doi/pdf/10.2469/cpb.v2007.n3.6003 Sai Wrote: ------------------------------------------------------- > My opinions after “–>” > > > MOPAHT Wrote: > -------------------------------------------------- > ----- > > My biggest fear in PM is ethics… > > > > could you guys comment my answers? > > > > Duty to all beneficiary --> Agree > > > wife treat as regular (IPO) --> Agree > > > Correction method is OK, but give back %% not > --> Correct, should credit interest, clients > should not bear financial loss for errors by firm > (see one of the Ethics case) > > > %% from debtor - not correct --> Don’t remember > > > CFA both incorrect because not used ® sign > (not > > sure about it 
--> Don’t remember > > > we should not fire but reduce assets (as far as > i > > see - should fire…) --> Should terminate > relationship for not following IPS, inappropriate > trade allocation, letting clients shoulder > financial loss for their errors, reviewing the IPS > a month or more after a trade, manager need to > preview IPS for suitability prior to trade > > > we should review quaterly from random employees > --> Disagree, the question asked most consistent > with CFA standards, employees should not front-run > client trades > > > move trades to broker - is OK --> Agree > > > when receive non public - keep confidential and > > dont use --> Should terminate relationship, need > to uphold the integrity of market and disassociate > from unethical behaviour > > > and we should suspend guy until evaluation --> > Don’t remember > > finished > > > > > > forgot other 2… > > > > thanks
Guys, I said at market value and pay interest. Here is my thinking behind it, let me know your thoughts: Assume that you have 2 clients: - Client A, who should be allocated the oversubscribed IPO shares, - Client B who you mistakenly allocate the oversubscribed IPO shares to. The general principle is that you should correct the mistake in a manner that would penalise neither client A nor client B. Hence the best thing to do would be to remove the shares from B’s account at market value and give B interest for the cash used to buy the share. You would then give the shares to client A at cost (ie IPO share price), thus bear the cost of the increase in market value of the shares. If you take the shares from B at cost value and then give them to A again at cost value, you would be taking a hit twice. It would also be ridiculous to pay B an interest on the cash used to buy the shares in that case. Any thoughts?
what if the market price is down from the cost? y unnecessaryily give share to client A at a higher price and sell it frm B at a lower price?
equity_research_nds Wrote: ------------------------------------------------------- > what if the market price is down from the cost? > y unnecessaryily give share to client A at a > higher price and sell it frm B at a lower price? The approach described above is for oversubscribed IPO shares, whose market value is greater than the IPO price. If the reverse is true and the market value of the shares is below the IPO price than the logical thing to do would be to take away the shares from client A at cost value, pay interest to A on the cash used and then sell the shares to B at the lower market value.