I am really tired of having to search every schweser book (volume 1, exam vol 1, exam vol 2) or cfa book, or cfa samples, etc, every time I need to have a look at a particular example regarding ethics… I guess you have the same problem. I just did this, hope you find useful. Please add any other tricky example you know: + Wait to buy/sell until public media = OK + Market impact selling/buying something illiquid without bad intention = OK + Not attributing original author (even with his approval= VIOLATION + Legal does not imply ethical + Gifts from clients should be disclosed to the employer, which will determine if affects independence and objectivity + IV B = additional compensation agreements = written consent from all parties involved + nature, amount, duration + Guarantee something (wrong) = VIOLATION + IPS = at least annually and prior to material changes + Compliance officer reports to CEO or Board of Directors + Info de clients to fellow employees involved = OK + If beneficial owner, act only AFTER clients and employers + Disclosure in research report of being beneficial owner = OK + Not enrolled = not a candidate + Small fee for something not related to professional activities without conflict = No disclosure necessary + But if the situation creates a conflict, written consent necessary + AMC = disclose fees and other costs, management fee, incentive fee, commissions + Disclosure of using simulated data = OK + AMC = disclose proxy voting policy + Pro rata = on the basis of order size + AMC = disclose regulatory actions + AMC = disclose significant changes in organization + Intern = employee (for IV A) + Creating new company during your free time (while employed) = OK + Supervisors: investigation first + Compliance approval of something bad does not mean you are free to do it + Discovering that some report has an error and is going to be public = tell supervisor (and eventually dissociate + legal advice) + Law Vs CFA: follow the stricter one + Trips: don´t accept payments (except when really necessary). Use judgement + Don´t accept pressure from IB + Disclosure of client gifts + Don´t write issuer paid research if compensation includes bonus for new investors buying the underlying + Don´t exaggerate what you / your firm can do + Research: if you receive compensation, disclosure necessary (you would not be independent) + Typo = OK, but if discovered you must take necessary steps + Acknowledgement when quoting other people´s work + Testing and modifying a model = still not yours, credit the original author + Copying plain language, basics = VIOLATION + Quote original source or second + original source + Civil disobedience = ok + If source = unreliable, info is not material + Mosaic theory = OK + Liquidity pumping = OK if disclosed + If client = pension, client = workers, not management + Client brokerage that does not benefit the client + not getting best execution = VIOLATION + Tell change of recommendation to ALL clients + Disclose trade allocation policy to clients and prospects + Disclosure of wrong practice does not mean you can do it + Sharing your view (more positive or negative) with only a few clients = VIOLATION + Suitability depends on portfolio, not a single asset + If using performance from previous job, disclosure necessary + Client doing something illegal = supervisor, legal counsel to check if notification to regulator is required + Employee-led buyout = OK + Don´t take with you software, even if you created it + Contacting public clients = OK + Time consuming second job = permission from employer + Bonus from clients = disclosure to employer + “Based on the fact…” = usually a violation + Group research: document the difference of opinion and request to remove his name + Notify change in investment process + 7yr records RECOMMENDED + Your family = any other client + Disclosure of referral fees to employer, clients and prospects + You change recommendation but receive a order (contrary) = advise the customer before accepting the order + IB client = put the stock on restricted list and give only factual info + Written consent from employer if independent practice that competes + Don´t contact clients before leaving for new firm or start independent practice + AMC specific for companies, CFA code can be part of a company´s code of ethics + Disclosure of ALL conflicts, not only those related to CURRENT portfolio holdings + Receiving an order contrary to IPS = inform investor that you can not do it + If compliance system is wrong, decline supervisor responsibilities + Historical data that actually happened = fact + Personal trade 1 week after report = acceptable + Sharing equity and bond research = ok + s&p = public info you can use without quoting + Ultimate responsibility for compliance = compliance officer + Current viable PROSPECTS = current clients, don´t contact them + Rejected PROSPECTS = you can call them, ok + Little details of models, algorithms = proprietary details, not disclosure necessary + Somebody accidentally tells inside info = try to convince him to make it public + “a Chartered Financial Analyst” = VIOLATION + Tell personal details to the client´s family = VIOLATION + Missing important news about a company you research = VIOLATION + No limit to value of gift received from a client if you have permission + Internal meetings: talk about clients WITHOUT saying names, for confidentiality
Nice brain dump! I like it! Im going to print it out and add it to my summary review.
> + Internal meetings: talk about clients WITHOUT Internal meetings: talk about clients WITHOUT saying names, for confidentiality Whats that?
you will see
hala_madrid Wrote: ------------------------------------------------------- > you will see come on, tell me the question.
schweser V2, 3PM… live it, love it…
Hypothetical question about Not enrolled=Not a candidate. If one is not a CFAI member or affiliate and passed L1 and not enrolled to take L2 yet, is he/she subject to the code of ethics?
3rd & Long Wrote: ------------------------------------------------------- > schweser V2, 3PM… > > live it, love it… haha, no wonder, that is the only one i didnt do it
account managers usually meet to discuss different things, and usually they identify some clients according to schweser this is a violation I sort of agree… I guess you can discuss “general” things like “my clients who bought this bond are angry”, specially with colleagues who are also involved with those accounts… But telling everybody what “Mr. XXX” has bought or sold is a violation
hala_madrid Wrote: ------------------------------------------------------- > account managers usually meet to discuss different > things, and usually they identify some clients > > according to schweser this is a violation > > I sort of agree… I guess you can discuss > “general” things like “my clients who bought this > bond are angry”, specially with colleagues who are > also involved with those accounts… But telling > everybody what “Mr. XXX” has bought or sold is a > violation that i agree but you can discuss specifics of the case with your collegues. On a townhall meeting that would be violation
"Don´t write issuer paid research if compensation includes bonus for new investors buying the underlying " even if it is disclosed?
Liquidity pumping is okay if disclose?
^ yes the goal should be to provide better service.
also, you can let target of your report to review FACTUAL details. That is allowed
what is the reference to liqudity pumping? As i recall it involved an agreement to increase liquiidty in illiquid markets, which essenitally benefits the client. Is this what you are refering to?
hala_madrid : Thanks for sharing. I appreciate it.
Really appreciate it.