Ethics kills everyone. Now let us kill it together!!! Let us put some useful points. Duty to client: proxy voting should be cost&effective, which means no need to vote everyone. independence and objectivity: client’s gift may be ok to accept. But if anything affect your objectivity, no way.
No gifts /comp from covered companies No buying of stock 30 days before research report and 5 days after research for covered employees&family members - Restricted period Agency trades - X client’s money can be used for Y CLIENT’s trades Prin trades - Need permission from X client , in case of fiduciary duty (some ERISA law ) etc , even this is not allowed Client Directed bRokerage- Is NOT a part of the Soft Dollar standards which cover everything else internal and external Prudent Investor- Can use Options , delegate in case relevant skills are missing,look at Total portfolio rather than a stock . etc etc
ap1978 Wrote: ------------------------------------------------------- > No gifts /comp from covered companies But as we’ve come to learn through loads of frustration, there’s leeway in this right? For example, there’s a problem a lot of people have seen where a company pays for a chartered flight to a destination that is otherwise inaccessable, and it is OK. This is always a tricky thing.
Code of Ethics Act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets. Place the integrity of the investment profession and the interests of clients above their own personal interests. Use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment recommendations, taking investment actions, and engaging in other professional activities. Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the profession. Promote the integrity of, and uphold the rules governing, capital markets. Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals. The Standards of Professional Conduct seven standards: I. Professionalism II. Integrity of Capital Markets III. Duties to Clients IV. Duties to Employers V. Investment Analysis, Recommendations, and Action VT. Conflicts of Interest VII. Responsibilities as a CFA Institute Member or CFA Candidate
SPA MED mnemonic to help remember the Code of Ethics: Subordinate personal interests Promote capital market integrity Act with integrity Maintain and improve professional competence Exercise reasonable care and independent judgment Demonstrate to others professional and ethical manners
@ sherbeer You forgot VI.
I think its “Conflicts of Interest”, but can’t remember exactly.
nm, you just forgot to hit at the end of V. Yep, I’ve had one too many cups of coffee this morning. Getting cranked up for a mock @ 9:30
Code of Ethics: IC*E — IP 1, act with (I)ntegrity, competence, diligence, respect, and in a ethical manner 2, ©lient first 3, reasonable ©are and indepent pro jedgement 4, practice in pro and (e)thical manner 5, promote the integrity of ©apital market 6, maintain ©ompetence. Key words: I – integrity, indep, interest P - promote, practice, professional, place Pattern recognition may apply.
remember you can inorporate your own business that competes with your firm in your free time, even if your company says you cant… this does not violate duty to employer. Unless you signed a non-compete contract Also, remember stealing is wrong, but you can have minor drug possession charges back in your hay day and this does not reflect negativly on you or the profession. Murder, frowned upon, but allowed. working part-time in a restaraunt and getting stock tips frokm brokers who come in (this has happened to all of us) - not allowed
I.A professionalism - most strict law/rule applys - 1st notify supervisor or compliance dept - may confront wrongdoer directly - dissociate (when resign?) - inaction = participation - no req to report to gov authorities ® - keep informed, revew regularly law/rule - encourage firm to adopt CoE - written procedure
I.B indep and objective (G) - no bow to investment banking. - flat-fee based issuer-paid research ® - restricted list - no IPO shares. - no way: – port. mgr accept gifts from brokerage firm – report paid bonus based on conlusion - disclosed&permission required(written): – gift contingent on future perf from client – any likely conflict with emp - disclsoed only – gift for prev perf. – flat-fee report - OK – token, modest gift, no strict $ – no influence (bonus from a part-time job)
I.C misrepresentation (G) - oral, written(email) form - on qualification, service, perf, character, … - guranteed return - plagiarism ® - written list of service to prevent plagiarism - quote the source except the recognized service like bloomberg, reuters. I.D misconduct (G) - professional related. ® - adopt a CoE - conduct a bg check for new hires.
This’s all for today.
More… more!! Thanks deriv108…
Compensation can’t be directly related to an investment banking IPO that you have worked on as a part of the team. But if your compensation is based on the overall profitability of the firm, that is okay. If you’re a mining analyst and the company pays for your charter flights between mining sites and accommodations at Bob’s Motel, that is permissible. As long as it is not lavish and won’t affect your independence and objectivity, it is okay. For some reason, the CFAI text likes to use mining analysts in their examples. You cannot plagiarize, always cite your sources. Unless the data comes from a well known financial or statistical reporting service.
CFAdreams Wrote: ------------------------------------------------------- > remember you can inorporate your own business that > competes with your firm in your free time, even if > your company says you cant… this does not violate > duty to employer. Unless you signed a non-compete > contract > > Murder, frowned upon, but allowed. working > part-time in a restaraunt and getting stock tips > frokm brokers who come in (this has happened to > all of us) - not allowed CFAdreams, can you specify a source for these? The first one boggles my mind. I would think that competing with your employer violates the loyalty standard - but if it’s in your free time and you do not deprive them of your abilities during your work time I suppose it makes sense. The second one confuses me as well.
My typing is slow, just like my reading. Here is II. II.A material non-public info. - material – affect the price – investor’ll take action on it. - non-public – conference call – non-public till it’s widely known (like publicly appear on CNBC?) -material&public – widely read newspapers, news site -non-metrial&non-public – mosaic(two CEOs got lunch) ® - firewall - restrict list for employee/proprietary trade II.B mkt manipulation - distort price/volume - rumor, distribute false/misleading info (negative&positive)
first one was off a mock, the murder thing i made up, not really addressed in the standards The stock tips from your job as a waiter is pretty much any cfai question ever written. You overhear 2 brokers talking, you cant trade on that info… no reasonable basis or its material info…
Can we clarify the last point What if you are a waiter and you overhear 2 people talking and one says Company X is going to go up 50% and you buy company X. I would say that is not inside information - those 2 people could be brokers with material inside information or they could be 2 clowns who read an article in a newspaper. It would be similar to if your doctor told you that he thought a stock was a great buy and you bought it… he has no knowledge… If you are trading your own account you don’t need a reasonable basis…?