I’m curious as to the extent a member or candidate (mac) must observe his duty of loyalty to clients and employers. For example, in the event a mac researches a company during his free time and deems it appropriate for his personal portfolio, would there be a loyalty violation if it turns out to also be suitable for his professionally-managed portfolios and he purchases it for himself only? Would priority of transactions come into play as well?
Any thoughts?
I would say yes, the way you have worded it. There is also the principal that one should not deny his clients or employer the benefit of his best knowledge, skills, or expertise. At the same time, the rules should not be interpreted so as to prohibit all personal trading. Anyone else?
I don’t think this is a loyalty violation, that’s more a question of competing with your employer or recieveing compensation that could create a conflict of interest. As you’re trading on your own account the compensation issue doesn’t come into this.
I think it’s more likely a violation of priority of transactions. Once you realise the position could be suitable for your clients you would need to follow that through and make the investment decision for your clients before you could trade for your account.
As an after thought the rules do not preclude personal trading, however if you are trading the same type of instruments for you as for your clients you’re always going to get caught in this. But if your trading your personal account well away from your professional mandate you have no problem. For example a Hedge Fund Analyst can invest pretty much where he wants in stocks and bonds.