In the CFA ethics book did anyone notice that while question #26 p158 allows a PM to sell (when contracy to the firm’s recommendation) as long it doesn’t disadvantage current clients, question#6 p225 (in the ROS section) prohibits trading in a manner contrary to employee or firm’s most recent recommendations. Is this an inconsistency - if not I didn’t realize ROS could differ so much from the Standards. I didn’t see either question on the errata. Please advise.
Can someone please advise on this? Just to clarify the question is over personal trades.
interesting…for personal trades, I believe a PM can sell the stock even if contrary to the recommendation of the firm, as you say, as long as it doesn’t disadvantage clients. He may have to sell to pay bills and what not and could be irrelevant to recommendations for clients. I can’t back this up from the book though…maybe if that other problem the guy deliberately was selling the stock left and right while simultaneously pitching the stock to clients himself, that is clearly a problem. But if it’s like “John the PM had to sell XYZ stock to pay his kid’s medical bills, and he personally didn’t write the recommendation, what’s the big deal”…would love to hear thoughts on this. Andrew
Per Andrew …“John the PM had to sell XYZ stock to pay his kid’s medical bills, and he personally didn’t write the recommendation, what’s the big deal” That’s exactly what I thought. In question#6 p225- Kepsh sells shares to pay for a wedding anniversary gift for his wife. Is this restricted because it’s a gift not a being used for financial hardship? The solution only states that its a violation because it’s contrary to the employee’s or firm’s recommendation. In question #26 p158 the PM is selling to cover child’s tuition. The solution states POT does not limit employee trading that differ from recommendations.
I agree your analysis. I think one can sell in contrary to the recommendation if he/she is in financial hardship (kind of must case). Wedding anniversary gift is nice to have not must pay bill. Hence, it is not considered as financial hardship.