Unethical Ethics. Seriously, wtf!

Source: Schweser 2015 exam 1 mock Afternoon session Question 61 -66 AND Schweser 2015 mock morning session exam 3 question 1-6

In the first case, someone’s working as an intern (unpaid) and works a night job to make some money - Schweser says this is a violation as it can be reasonably expected that this job will interefere with her ability to perform her internship

In the second case, someone’s working as an intern (little pay) and works as a waitress at a diner (popular with brokers, etc) and receives a bonus from her waitressing job - Schweser says, neither her working at the diner nor accepting an extra cheque is a violation as the job is not related to her main line of work i.e. finance

There was another case (I can’t remember source) where it was acceptable for someone to work Friday night and Saturday.

Seriously, WTF is the rule on doing part time jobs which are seen to be unrelated to investing/finance/trading/markets etc etc? And what is the definitive rule regarding accepting a salaary/bonus from a job that is not related to finance? And how can we possibly assess whether or not a part time job will reasonably interfere with one’s capability to their regular day job?

PS: I don’t generally moan about things but this is heights, I mean WTF!

The devil is in the details.

Mock 1 - it’s violation if not disclosed not because someone work as a waiter (or whatever unrelated to investment profession ) but because he work 30 hours per week and we can reasonably expect this to affect his job.

Mock 3 - note that the Q ask only whether the accepted gift is violation, not the job by itself.

In the last example - if you work only few hours a week it’s not violation because 4-5 hours Friday/ Saturday won’t affect your investment performance.

Would you like in this topic to post all Ethics related tricky questions? I find the title very appropriate :).

PS: What happened to your day off from CFA studying?


I get the mock 1 part and I agree

The issue is with Mock 3 - where if you read the answer at the back, it says the job itself is not a violation too - which means either they’re assuming themselves that she does too few hours or admitting that generally it’s ok not to disclose unrelated work. This is what confuses me - you can’t have double standards about part time work which doesn’t compete with your day job.

As for posting all tricky questions, I’m open to it sure - won’t be able to immediately type things out as I have to do mocks but happy to type it out as the day goes by.

PS: I took a full day off yesterday, but for some reason I couldn’t hep but keep a track of topics being discussed here (sad, I know) but 7th june is not far.

I’m a trader, trading for my own account - because of the trades I give to my broker, my broker wants to take me on an expensive trip to Barca to socialise with the BSD’s…violation or not?

Not a violation unless you use the same broker to execute personal account trades AND company/client related trades. If it’s just a PA account broker, then you are the client and surely there can be no loss of independence and objectivity if it’s your own trading decisions and investments we are talking about.

I say go to Barcelona and large it up fella!! :wink:

^+1 if it’s your own account no violation

Your company issued “hold” recommendation on a stock. Two weeks later your wife calls you and tells you she is not convinced in the future prospects of the stock and she wants you to sell her stocks. Is it ok to sell according to the recommended procedures of ROS?

Not sure about this but I thought I’d bump this as I’m interested to hear the answer.


Two things - If wife is the client of same company, you can sell the stock after advising to her the fact that the Company has recommended a buy. Probably no need to inform your department, despite having an indirect beneficiary.

If she is not client, you are indirectly a beneficiary (unless divorce will be completed before two weeks) and if you sell, you need to take an approval before (which the Company would not provide unless you’re in financial distress!). Thus, selling them would be a violation.

Hope I am thinking in right direction. Any one else?

I was going to ask people here about this. I came across a similar question in which that analyst sold his stocks after 5 calendar days since his firm realsed a “buy” recommendation. I chose “no violation” because I recalled the above case. However, I got that question wrong. He still violates. Thoughts?

You can’t trade for your personal account in the opposite direction of your firms trade recommendation unless it is due to extreme financial hardship.

if your company currently has a “buy” rec out on a stock, you can’t short or sell a currently held position in your personal account unless you have to pay for medical bills or some other “urgent” costs that place you in extreme financial hardship.

I would suggest if its your wife’s account that you trade on, that would still fall under the above rule if you are deemed to be a “beneficiary” of the account…especially if you live together, married in the same household.

^ +1 Spot on.

That was the trick in the question. Reading carefully recommended procedures for personal trading and investment it’s recommended:

  1. both the trader and his immediate family members not to trade 30 days before and 5 days after the report issuance;

  2. only the trader should not invest contrary to firm’s recommendations.


“2) only the trader should not invest contrary to firm’s recommendations.”

So I can issue a buy report, cause the stock to shoot up and have my wife sell her stocks 5 days after on a high price?

You won’t violate any required or recommended procedures. Notice how in some parts of the ROS they have included “immediate family members” and in some not. It’s not omission

I think in this instance the wife and the trader are interchangeable as they are both beneficiaries of the account. So that should probably read “only the trader or any account to which he is a beneficiary should not trade contrary to the firms recommendations”

What if the wife of the trader is a client of the firm and she doesnt want to hold shares?

You’re at lunch on Wall St and you overhear a convo from the table next to you where one guy says to the other, “Crawford, you son of a gun, we’ve got a deal. This is going to help both of our firms, no doubt.” You see the men shake hands. You do not recognize either of them. Two days later, you are back at the office and you turn on CNBC and listen to a phone interview with Jason Crawford, CEO of XYZ Company. He mentions that firm prospexts look good and they’ll have some announcements for the public soon.

The overhearing party, who does not specifically recognize Crawford’s voice, buys 1000 shares after listening to the interview on CNBC.


It sounds to me like a mosaic theory. You hear they have a deal but it could be anything. I’m curious what the answer is.

So am I, I made the situation up.

Edit- I lean Mosaic Theory as well. What if the guy’s last name was Hollander-Jozenstein? Then you can be reasonably assured IMO that it’s the guy on TV. Is it MNPI then?