Sample 2 (Paid 1) exam

Father executes trading instruction from daughter and then “places an order to purchase a block of shares, which he allocates among his client and personal accounts”. I understand this is violation of V(a) reasonable basis, but I thought this is also violation of VI(B) priority of trading? - sticky

i think “father” is in violation of V(a) reasonable basis the guy gives tips to his father is in violation of VI(B) priority of trading

I believe this is the one where the daughter is an analyst and the father is a PM. He is not in violation of REasonable basis b/c his daughter recommended it, he is not in violation of Priority of Trading b/c he bought a Block trade for his Clients. But the personal accoutns part I dont recall reading… Sticky did you change something?

I think Priority of trading comes into picture if Father trades personal accounts before Client accounts. It is a violation of reasonal basis as Father should do his due diligence before he puchases anything for his clients.

He has reasonable basis b/c his daughter was a research analyst and did a full report, so he had reasonable basis…I actually remember gettign this one right :slight_smile:

Sorry, bigwilly. I was just guessing from the question. I actually didn’t take this exam yet.

^Not fair, now you will get it right :wink:

It’s about time I got something right on this damn exam! :slight_smile: Thanks!

lol

Please read my first question. Can anyone tell me if this is a violation of priority of trading? - sticky

Sticky, I’m guessing you chnaged the original question a little. So if he did a block trade for himself and Clients, then as long as he allocated to his clients first then he didnt violate I believe.

He did violate the reasonable basis standard though. The CFAI explanation is below…verbatim. “Boyle did not have a reasonable and adequate basis, supported by appropriate research and investigation for his block purchase”

Ok, now I have to review this one b/c I got it right so I must have forgot a piece of info… What’s happening to Me !!!

that’s right b/c she just tells him its a good buy, but he doesnt see the report, my faux pas… See what happens when you try to remember an item set.

bigwilly Wrote: ------------------------------------------------------- > that’s right b/c she just tells him its a good > buy, but he doesnt see the report, my faux pas… > See what happens when you try to remember an item > set. I think the situation was more like…the daughter did some research and then asked her father to buy some shares for her children’s college plan because she thinks it’s a good buy. Her father did that and then he bought a large block for his clients(without doing any research, etc).

^yes

bigwilly Wrote: ------------------------------------------------------- > Sticky, I’m guessing you chnaged the original > question a little. So if he did a block trade for > himself and Clients, then as long as he allocated > to his clients first then he didnt violate I > believe. He did a block trade order and “allocates among his client and personal accounts”. No more information. Is this violating priority or trading? OK, or put it this way: a guy got 100% reasonable basis and does a block trade order and allocates among his clients and personal accounts. Is this violation of priority of trading? - sticky

If he allocated the trade first among the client accounts and then his personal account — then NO.

I dont think it would as long as he allocates first to his clients then any remainder he can have…

^haha we are good :slight_smile: