In schweser video he lists the following order, Would you agree with this hierarchy of responsibility?
Clients
Capital Markets
Employer
Me
So Clients come before Integrity of Capital Markets?
Wouldn’t that defeat the point of Capital Markets in the first place?
Manipulating the market is in my client’s interest too!
Actually an interesting point. In some cases, I guess you could compare it to a lawyers conflict to his client (who is paying him) and a situation where they have an obligation to the justice system. Except in this case the market is not a defined legal entity. If you follow the CFA’s ranking, in a way, you could defend Raj Rajaratnam’s insider trading on behalf of clients. However, it’s been awhile since I looked at the ethics text, but I think they go on to define limits to the hierarchy around such circumstances. For instance, I believe the hierarchy exists within the bounds of the law, nullifying cases such as market manipulation and insider trading, etc.
You cant manipulate markets for clients interest and you cant ‘serve’ the markets at your client’s expense. It varies. The statement is true but not necessarily in all cases. In principle individuals (me in this case) interest should be least important.
Thank-you so much for responses. I have other unrelated ethics questions. Please consider these two brief scenarios which are unclear to me. Scenario 1) An employer teaches/mentors me his specific method of identifying technical trading indicators. I quit that job. Can I use those techniques even though it’s to my past employer’s detriment? Can I teach others the techniques? Scenario 2) Prior to quitting my job, I memorize a list of the firm’s client names. After quitting I contact them up using publicly listed phone numbers and emails to solicit their business. Am I in violation of loyalty to employer?
Scenario 1 Client comes first, I agree that Capital Markets is the backbone, and the ethical thing. If the choice between investing in futures and forwards, or to pay an immeidate dividend, the choice should be to reinvest, but a little less, so that a small dividend can also be paid, that being said, the employer and me should put all our interest as possible (dollars) into the capital market, to increase the dividend further
Scenario 2 It will not be violating if you follow the principles of scenario 1
Yes, it’s been awhile since I covered the text, but this is simply the experience you’ve gained and you’re allowed to use it provided you haven’t signed some form of non-compete agreement in your employment contract.
Not in violation, if publicly available information, these are simply your client contacts which you are free to use. However, exporting a document with these would be a violation. If you read through the examples, I believe this is listed as well. These are very much the sort of questions you can expect on the exam, so it’s good you’re looking into them now. Very important to reread the ethics section in the week before and focus on these sorts of details as well as order of notification (notifying employer BEFORE taking various actions) and who does and does not need WRITTEN notification and approval in various scenarios.
Skills learned in any existing job can be applied unless any contractual binding, which is less likely to happen, is there. Based upon memory and getting the numbers from publicly available information one can contact with the clients.
Are investment bankers allowed to receive gifts from both IPO company and investors? Who is considered investment banking client?
i think from company u cant accept any gifts only tokens… but from clients yes but u need a approval from ur supervisor first …
Who’s the client in an IPO investment bank the company or the people I’m selling it to?